A well-crafted watchlist is critical to smart investing: It can help you find attractive buying opportunities, and it can save you from rushed, emotional decisions by slowing down the process. The Fool now offers MyWatchlist.com, your free customized hub to follow the performance and Fool news and commentary about the companies you're watching.
But what to put on your watchlist? Today, Motley Fool Special Ops senior analyst Mike Olsen shares a pair of companies that he's added to his watchlist and one that has since made the jump to his Rising Stars portfolio.
One to watch
Although it doesn't always appear to be the case, mortgage underwriters actually look at data before deciding whether to make a loan. Often they get information like background checks, appraisals, and flood histories from CoreLogic
But while the company's share price has remained flattish to down since its launch as its own company earlier this year and looks cheap today to Mike, there's one housing market that doesn't work for CoreLogic: a stagnant one. Without a meaningful improvement or decline in the housing market and with interest rates about as low as they can go (precluding much new refi activity), this one might be at a bit of a standstill. And Mike thinks the housing market could muddle for quite a while, so he's content to watch.
Two to watch
Quarries have, by their very nature, a high barrier to entry. You can't just dig out a new one wherever you want. As a result, companies that run quarries have significant pricing power and rely on proximity to keep business rolling -- even if a builder can get a better price on gravel from a quarry two states away, the transportation costs would overwhelm any potential savings. With more than 300 quarries and distribution facilities, Vulcan Materials
But none of that matters if nobody's building. Vulcan is heavily tied to residential housing and government spending on infrastructure. Even though the stock is well off its 52-week high, and even though highways will be built as part of ongoing government stimulus funding, Mike needs to see more reason for optimism. State and national deficits are positively enormous, and as with CoreLogic, Mike doesn't see residential markets markedly improving anytime soon. He'll keep an eye on share price and macro concerns before digging in.
And one he bought
Three years ago, it was taken private by Fortress Investment Group
But despite its heavy debt load, the company is being powered by some attractive tailwinds, notably oil prices near $80, which makes trains far more economical than trucks. And after watching the company intently, Mike felt confident that its recent price was a bargain because, "In my experience, it's a rare day when you can find a stellar business, depressed valuation, and accompanying value catalysts. But today's the day."
And that's exactly why it pays to watch. You can make smarter investing decisions with your own version of My Watchlist, new and free from the Fool. Click below to start following one of the stocks mentioned above:
Roger Friedman doesn't own shares of any companies mentioned, but they're all now on his watchlist. First American Financial and Vulcan Materials are Motley Fool Inside Value choices. The Fool owns shares of RailAmerica. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.