These Cold Stocks Are Heating Up

When a stock's share price is lower than a North Dakota thermometer in February, investors tend to give it the cold shoulder. But as the market warms to a stock's prospects, its price can heat up in a hurry. Alas, you can rarely tell that a stock is melting investors' hearts until after it's made that upward leap.

Taking the market's temperature
But Motley Fool CAPS' proprietary ratings, aggregated from the opinions and accuracy of 165,000-plus members, offer a great way to monitor investor sentiment. Following a CAPS rating trend can help us determine the best time to invest. Let's look at previously rated one- or two-star companies that have recently enjoyed a bump in investor confidence and see whether they're truly heating up -- or headed back to the deep freeze.

Source: Motley Fool CAPS.

Obviously, this is not a list of stocks to buy -- just a starting point for further research. Yet if some of the best investing minds are taking notice of these stocks, maybe we should too. 

Caution: Contents may be hot
Analysts have been fretting about an oversaturated market for big-screen TVs, figuring a slowdown in sales will upset growth at glass panel maker Corning (NYSE: GLW) and others. LED specialist Cree would be hurt if that came to pass, as its light-emitting diodes play an increasingly large role in the TV light market. No doubt the weakness shares in Cree, Aixtron, and Veeco Instruments (Nasdaq: VECO) has been as a result of this drumbeat of negativity.

Although Corning did rein in estimates for the third quarter saying flat panel manufacturers are dealing with higher than expected inventories, it reiterated its full year guidance and finds demand across all geographies to be strong. That can be a bullish indicator for LED leader Cree, but since it's also working to bring the future stage lighting option to the mainstream there will be many opportunities beyond TV sets to help propel sales.

That's what CAPS member Vbatwork is focusing on, even as he acknowledges the impact the TV side of the business can have.

Stock getting hammered I guess because of a possible glut in flat panels...? How many LEDs does that mean for the company in sales? A better bet is on the LED lighting side of the business. Tremendous energy savings can be had switching to LED lighting and this company has a boat load of products for residential and commercial. Balance sheet is in nice shape ($1bn cash, zero debt, 10.77 quick ratio, 78% revenue jump YOY)

A clear road ahead
That seems to be similar to the feelings about the auto industry. Ford (NYSE: F) continues to post solid numbers, even though there are concerns about fleet sales, while General Motors prepares to return to the public markets, indicating a recovery is taking hold (just don't look at Toyota sales, though even there it has a lot of cylinders pumping).

So if the industry is driving back, then Lear is definitely an auto parts stock you'd want to own. The big carmakers aren't going anywhere without Lear or Johnson Controls steering them in the right direction, and having itself recovered from bankruptcy, Lear is ready to move ahead. With almost 90% of CAPS members rating the auto supplier to outperform the market, it would appear they think it's in the driver's seat.

Golden globes
Up, up, and away! That's what investors should be saying about gold, which hit a new record high of $1,280 an ounce on fears of inflation. Gold bugs have been saying all along that inflationary pressures were building. Governments around the globe were spending money as fast as they could to stimulate local economies; sovereign debt pressures were mounting as Greece showed great disdain for instituting necessary austerity measures; and the underpinnings of what looked like an economic recovery were shaky indeed.

Barrick Gold (NYSE: ABX), Goldcorp, and Newmont Mining all placed bets that gold was going higher when they forsook hedging gold altogether. CAPS member TraderMikeSays thinks there's still room for further growth yet.

The gold trade is still on. I'm going to hang onto this one a little while longer, it seems to be trending-up in the chart and has some more room to run. Another bullish cross coming.

Checking the mercury
Are these stocks invitingly warm or bitterly frosty? It pays to start your research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made all from a stock's CAPS page. Then weigh in with your own thoughts on which stocks you think are hot little numbers, and which offer cold comfort. It's free to sign up.