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.
EPS Estimates (This Year - Next Year)
||***||$3.71||($1.15) - ($1.19)|
||***||$7.25||($0.47) - ($0.51)|
||***||$26.00||$1.71 - $2.11|
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
Earlier this year, Celldex Therapeutics was helped by rumors that it was a takeover target, but once that failed to materialize investors had to view it for what it was: a brain cancer treatment developer without a major partner. Pfizer
Celldex shares are down 10% year to date and 46% over the past 12 months. So why might CAPS members be feeling more confident about the company? It is developing a drug to treat a very aggressive form of brain cancer, and the money raised from the secondary offering will fund late-stage trials. With sufficient cash on hand and moving into advanced testing, investors see the potential for success. It probably also informs why the takeover rumors got started. Someone just might want to keep the competition from getting this.
Long Term Watch List: I used to own Medarex before the BMY buyout...as I understand...a lot of the talent went over to [Celldex]. Another plus is that mangement is not afraid to come out and say they want partnerships and are not afraid to sell the company if the opportunity presents itself.
Let us know on the Celldex Therapeutics CAPS page what you think.
Investors in Exact Sciences were also confounded by the company's decision to price a secondary offering significantly below where it had been trading. The biotech is also targeting cancer, but through diagnostic testing, and last November, with its stock riding high around $9 a share, decided to price its offering at just $6 a stub. It hasn't quite made back half that amount, but it's preparing for the upcoming clinical trials of its noninvasive colorectal screening technology, Cologuard.
Exact has a lot riding on a positive outcome since its primary revenues are related to selling diagnostic test licenses to LabCorp
CAPS All-Star NHWeston admits profitability could be a challenge for Exact as it ramps up marketing for its diagnostic tests (if approved), but the market potential is large and its low price attractive:
Its test allows for an inexpensive procedure which would mean either  clean bill of health without the colonoscopy ordeal or  a fairly specific diagnosis that would insure the need for scoptic and surgical follow-on.
Something to nosh on
I gotta admit, I'm pretty impressed with the transformation Jennifer Hudson has made on Weight Watchers
There are fat profits to be made in weight loss, and, like investing, there are many paths to achieve the goal. Medifast is pursuing its own route, and though it had a setback after having to restate financials, it remains committed to expansion. It saw double-digit sales growth in both its direct sales and direct response divisions and Medifast says it plans on opening an additional 25 to 30 new stores this year.
While profits rose 42% this year to $0.23 a share, analysts had been expecting $0.32 per share, so that was a big miss. Head over to the Medifast CAPS page and exercise your opinion on its future.
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.