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
Stem cell researchers are building up a body of evidence that makes their work much more interesting and palatable to large pharmaceutical companies that perhaps their financing issues won't be such a concern in the near future. Pfizer (NYSE: PFE) and GlaxoSmithKline (NYSE: GSK) are but two giants looking to foray a little further into the field.

With Geron making it past the preclinical testing phase and StemCells (Nasdaq: STEM) receiving approval in Sweden to advance testing the critical mass that's forming is encouraging for investors who are looking forward to a payback on their investment.

Yet Geron showed that money still matters as it shot itself in the foot, at least in the public markets, after it sought to raise $87 million in a secondary offering in December. Following months of saying it had plenty of cash in the bank, the secondary priced nearly 20% below what shares were trading at set off alarms that sent the stock careening lower. While such offerings are pretty common, it came as a big shock as it suggested the biotech was a bit more hard up for cash than it let on.

Yet investors remain hopeful that the white lab coat guys will eventually trump the green eyeshade types. CAPS All-Star zzlangerhans admits the timing was peculiar.

This raises the question of whether the company is expecting angeative catalyst in the near term, such as negative data for GRNVAC1 in AML. On the other hand, the share price is now close to the year-low of 4.5 and there has been substantial progress in the pipeline with new trials of imetelstat and GRNOPC1.

Although he thinks the price drop was a bit much so Geron represents a short-term play on a bounce back up, you can tell us on the Geron CAPS page how you think it will play out.

A glowing opportunity
Having reached record highs of $136 a pound in 2007, uranium currently trades at around $73 a pound and is expected to go higher as China seeks to offset the emissions from its coal-producing utilities. No doubt that helps explain why Cameco (NYSE: CCJ) and other uranium plays have enjoyed rising share prices. Indeed, the CAPS Uranium sector is up 17% in the past 30 days alone.

And it might be why Uranium Resources is surging along with the rest of the industry despite having no production. The small-cap miner mined out its Vasquez project in 2008, depleted its Kingsville Dome project, and found the economics of its Rosita project couldn't overcome the technical challenges it faced there. But rising uranium prices may make it feasible to start producing again, and it's actually teamed up with Cameco to possibly develop some South Texas properties if the exploration proves fruitful.

CAPS member modestus1 is looking for higher uranium pricing to be the catalyst that sends Uranium Resources higher too while ScottieSD says the broader adoption of nuclear energy can only be positive. You can follow along with its progress by adding the miner to your watchlist.

Step into the stream
Like fellow assisted living operator Brookdale Senior Living, industry peer Sunrise Senior Living adopted a model of growing bigger by getting smaller. Now that the worst of the crisis has passed, Sunrise is seeking to coordinate its best properties, entering into a new joint venture to operate 29 communities that it currently manages. It sacked its CFO and combined the office with the current chief accounting officer, which points to a new financial outlook for the senior living operator.

Sunrise reduced its debt, has $41 million in cash, and even after adjusting for one-time cash infusions, managed to eke out a small profit. It's that last part in particular that keeps Blluecheese hopeful.

Now unlike many of its competitors, they are profitable. So it puzzles me how now that most of the debt overhang has been shed, that other senior living companies with fewer operating units, unprofitable, and with older properties are valued more than this company. They have no P/E because they are losing money but have a higher multiple of sales than [Sunrise]. I'm convinced it should be trading at 15-20 P/E but is now trading at less than 7.

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.