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 170,000-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
Like other medical-device makers, including Intuitive Surgical (Nasdaq: ISRG), the cutback in capital expenditures at hospitals during the recession hurt sales at Cepheid, but with a spending thaw under way, the molecular diagnostics company is seeing renewed interest in its devices.

Yet this isn't a blanket increase across the sector. Celera (NYSE: CRA), for example, saw a dramatic drop in sales and Accuray reported lower revenues. Cepheid, however, is benefitting from the big spending going on in molecular diagnostics, which is the fastest-growing segment in the in vitro diagnostics sector. The purse strings at hospitals and labs haven't fully opened, but Cepheid's pipeline of products should keep it growing until they do.

No doubt that's why 92% of CAPS members rating the medical-device maker believe it will offer market-beating results. Let us know on the Cepheid CAPS page whether you think the stock will test new heights.

A clear road ahead
Heading into the important holiday shopping season, retailers are appreciating the bounce they got from back-to-school sales. According to data collected by Bellomy Research, retailers have enjoyed eight consecutive months of year-over-year increases in spending. Abercrombie & Fitch (NYSE: ANF) even enjoyed better sales, though it still isn't a sexy investment at this point, as have Zumiez and The Limited. But like the medical-device market, the good news is not uniform. Hot Topic was one where comps missed expectations.

While Urban Outfitters also saw soft sales, it was in the market buying up its depressed shares and agreeing to buy up even more. CAPS member derbygirl thinks Urban's conservative approach to growth will serve it well in the future: "Plenty of room to grow since they've been so careful with expansion."

Only you can decide whether Urban Outfitters belongs in your portfolio, so add it your watchlist and have all the Foolish news and analysis about the stock aggregated in one place.

Golden globes
Investors have been whistling Dixie to explain their patience with grocery store chain Winn-Dixie as it continues to lose sales to tastier rivals like Whole Foods (Nasdaq: WFMI) and Kroger. While it again reported lower revenues, the stock is looking too cheap to completely ignore. It trades at less than half its book value and at a miniscule fraction of its sales, but has no long-term debt. Meanwhile, more than $130 million in cash sits on its balance sheet. If nothing else, its low price might make it an attractive acquisition target. That's exactly what CAPS member showmedamani is thinking: "The balance sheet is too strong to ignore the value in the company. It could also be a good takeover target... "

Head over to the Winn-Dixie CAPS page and let us know if you agree this grocery chain is in the express lane at checkout.

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.