When asked for the secret of his success, baseball player Wee Willie Keeler replied, "Hit 'em where they ain't." What worked for Willie at the plate applies equally well in investing.
Seeking stocks that others ignore, shun, or simply forget gives individual investors like you an edge over the professionals. When Wall Street turns a blind eye, you have a chance to get in before these stocks get discovered -- or rediscovered -- and start taking off.
Below, we'll check out companies with only a handful of analyst coverage, then pair our list with the opinions of the Motley Fool CAPS community. A stock that garners CAPS' top ratings, but hasn't yet caught analysts' attention, could be your next home run investment.
|
Stock |
CAPS Rating (out of 5) |
Wall St. Picks |
Est. EPS Growth Next Year |
|---|---|---|---|
| America Movil (Nasdaq: AMOV) |
***** |
0 |
NA |
| Star Bulk Carriers (Nasdaq: SBLK) |
**** |
5 |
26% |
| Toronto-Dominion Bank (NYSE: TD) |
**** |
5 |
12% |
Source: Yahoo! Finance, Motley Fool CAPS. NA = not available.
Remember, without much analyst support, you'll have to do your own scouting to see whether these stocks deserve a spot on your portfolio's roster. Don't just buy or sell them based solely on their appearance here.
Hiding in plain sight
Although less than 100 CAPS members have rated America Movil's Class A shares, more than 1,700 have weighed in on the L class, which trade under the better known AMX ticker. There are three classes of stock for Latin America's biggest telecom carrier, and while the A (and non-trading AA) shares have full voting rights, the L shares get a preferred annual dividend. The two trading classes tend to move in lockstep with each other.
America Movil reported earnings at the start of the month showing a better than 12% increase in subscribers, but it's looking to Brazil to keep its growth momentum growing. The stock, though, has plunged as Movil's owner Carlos Slim becomes entangled in a legal web involving greater competition. While his other property, Mexico's biggest telephone landline operator Telmex (NYSE: TMX), won a minor victory in a local court for its effort to offer pay TV services, the country's supreme court has admonished its efforts to hinder with injunctions Mexico's regulatory agencies' efforts to promote more competition.
The tangled web weighs heavily on the stock, but several dozen All-Star CAPS members unanimously agree that America Movil will likely prevail in the end. Let us know in the comments section below or on the America Movil CAPS page whether there's a slim chance it could lose.
All hot and bothered
The glut of ships depressing charter rates in the dry bulk sector have reduced some shippers like Excel Maritime (NYSE: EXM), Eagle Bulk Shipping (Nasdaq: EGLE) and Star Bulk Carriers to near penny stock status. Yet it also creates opportunities to buy on the cheap. Not just for investors, but for the carriers themselves.
Star Bulk, for example, just snatched up two capesize bulk carriers for $51.5 million. These are the largest vessels out there and they come with long-term charter contracts attached to them. One runs until 2014, the other 2015. In periods of rising rates, dayrate charters allow carriers to profit from renewed contracts, but in periods of rate depression like the industry is now suffering, having long-term charters locked in provide stability.
The problem arises at the turnaround point when rates start rising again and the carrier is stuck with a (perhaps) lower, long-term charter. As it is, though, Star Bulk expects the ships to generate between $26 million and $44 million in gross revenues, respectively, making the purchases timely, profitable ones.
With 97% of the nearly 700 CAPS members rating Star Bulk to outperform the broad market averages, they're expecting the dry bulk carrier to weather the stormy seas. Give us your opinion on the Star Bulk Carriers CAPS page, or add it to your watchlist.
Don't be alarmed
If you're familiar at all with Toronto-Dominion, it's probably through its TD AMERITRADE (Nasdaq: AMTD) discount brokerage -- the third largest in the U.S. -- or its TD Bank branches, which now are more numerous than those it has in Canada.
It's still a low-profile company on its own, but that doesn't mean it doesn't have big plans. Back in December, it bought Chrysler Financial from the private equity group Cerebus, which has had a terrible go of it, having bought both it and GMAC during the financial crisis. TD is expected to grow its bottom line at a solid rate of 12% annually, faster than many of its U.S. rivals.
Earlier this year, CAPS member pointed out its U.S. expansion strategy marked it for outperformance:
Wisely buying up US banks at very good prices. When the picks up TD will be very well placed.
Add Toronto-Dominion to the Fool's free portfolio tracker and stay on top of all the news as it develops.
Swing for the fences
When seeking investments where no one else is looking, Motley Fool CAPS is the best place to start your own research. 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.
Sign up today for the completely free service, and tell us whether these hidden stock opportunities will help us go one up on Wall Street.
