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
Antares Pharma has been focusing on self-injectables and topical gel-based products, for which it's estimated there's a $125 billion market in biologic drug injectables alone. By teaming up with larger partners like Teva Pharmaceutical (Nasdaq: TEVA) and BioSante Pharmaceuticals to develop and market its products, investors hope Antares can inject some profits into the picture soon.

But CAPS members are looking at a more immediate opportunity, Antares treatment for overactive bladder syndrome (OAB). The pharmaceutical submitted a new drug application with the FDA, and while CAPS member JuanPeter admits the drug met its end points in its trials, he's concerned they didn't sufficiently surpass them.

My concerns: although both doses met the primary endpoint, the statistical significance was not very strong and one dose didn't meet the secondary endpoints; a P/B of 20 means overvaluation, and just $10MM cash means a likely dilutive financing before the PDUFA date.

CAPS member MattoRuu, on the other hand, is looking at the market size of OAB to suggest Antares will grow.

In 2009, the U.S. OAB market was 2.1 billion USD. This market in the United States is expected to increase to more than 2.3 billion USD in 2014. In the United States alone, it is estimates that more than 34-million men and women are affected by overactive bladder syndrome.

How sweet!
The roll-up in confectionaries petered out after Kraft (NYSE: KFT) bought Cadbury and Mars chewed up Wrigley, leaving Hershey and Tootsie Roll the two obvious choices left for investor consideration. So if you have a sweet tooth for stocks, Hershey might be one investment to give some thought to.

One analyst upgraded the company to a buy, saying it has done a good job of investing in its business and represents "clearest growth story in food." It's come a long way from Goldman Sachs criticizing Hershey's board for failing to overpay for Cadbury and figuring it had crushed its opportunity to grow.

Of the nearly 600 CAPS members that rated Hershey, 82% of them believe it will go on to outperform the broad market averages. Wall Street, though, probably still hasn't got beyond the lost opportunity as only 56% think it can do so. Let us know on the Hershey CAPS page if this is still a sweet opportunity.

Step into the stream
Accounting for one-fifth of all peak U.S. Internet traffic, Netflix (Nasdaq: NFLX) is a huge player in online video that is set to explode even higher this year. That's why CEO Reed Hastings has said his movie service is a streaming company first and a DVD rental outfit second.

Investors had hoped Limelight Networks would win some of the business Akamai (Nasdaq: AKAM) was getting previously, but as we've since found out it was Level 3 Communications. Disappointed Limelight shareholders sold off the stock, but tab66 believes it still has enough juice to go further: "Streaming is it. With strong customer relations into the top growth companies this is like selling shovels in the goldrush!"

Add Limelight to your watchlist to have all the Foolish news and analysis compiled in one location, then head over to the Limelight Networks CAPS page and shine a light on its growth potential.

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.