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. 

Finding money on (family) trees
On the surface, you wouldn't think delving into your hoary past would be a profitable venture. Interesting, for sure, but not enough to make money from. But Ancestry.com has found that people are willing to pay for information on their forebears. As of March, it had more than 1.6 million paying subscribers globally, up 33% from a year ago, with a monthly churn rate of just 3.7%. The key, as those numbers show, is that they've made their service very sticky.

Those initial views of your family tree may be intriguing. But it's the ability to collaborate online with relatives and friends to grow your understanding of where you came from that seems to be the main thing that keeps people hanging around -- even long after finding out that they're not related to the Duke of Windsor, or that Aunt Ethel really did have ancestors among the original 102 passengers aboard the Mayflower.

Ancestry.com offers an advantage then over a space like TheKnot (Nasdaq: KNOT), which has subscribers coalescing around a closely felt theme -- an impending marriage. Once the deal is done, the rings exchanged, and the ball and chain firmly locked around the ankle, there's little reason to return. The Knot needs a new supply of victims -- er, affianced couples -- to continue growing and attracting vendors.

CAPS member JLeezy69 also believes Ancestry.com has demographic trends on its side.

There are TONS of less-religious, soul searching baby boomers out there who are increasingly seeking answers to questions about their self-identities and their family histories, but have no parents/grandparents left to ask. "Who am I and where do I come from?" Enter ACOM.

Let us know on the Ancestry.com CAPS page whether the misty depths of time will continue providing new growth opportunities.

Picking the lock
The huge security breach at EMC's (NYSE: EMC) RSA Security that led to a hacking attack against Lockheed Martin -- and that occurred as a result of its compromised authentication tokens -- is providing Identive Group with an opportunity to score points at its rival's expense.

Although it is arguably more closely identified with near-field communications that allow communication over very short distances (typically just a few centimeters), Identive's idOnDemand unit offers standards-based, highly secure identity cards. They're offering RSA customers the chance to trade up to a secure smart card for free. CA Technologies (NYSE: CA) is also trying to use the breach to its advantage by offering a software-based security option.

With only 16 CAPS members and just a half-dozen All-Stars weighing in so far (and no professional analyst coverage), Identive Group is flying under the radar of most of Wall Street and Main Street. You can beat them to the punch by adding the security company to the Fool's free portfolio tracker and sharing your opinion on the Identive Group CAPS page.

Don't dig for this silver play
It's almost the perfect business. Silver Wheaton lets gold and copper miners like Goldcorp (NYSE: GG) that produce silver as a byproduct of their operations do all the dirty work of mining the precious metal. Silver Wheaton merely takes possession of their streams to sell into the market.

It's a much lighter business model than being a miner, but the rewards can be just as lucrative, if not more so. Particularly in times like this, with silver prices at elevated levels (even if they've given back some of their best gains), Silver Wheaton will be prosperous.

That could be why, out of the more than 2,500 CAPS members rating the silver stream specialist, more than 95% see it continuing to outperform the broad market averages. Considering Federal Reserve Chairman Ben Bernanke's less-than-inspiring press conference earlier this week, CAPS member JaysRage decision to use Silver Wheaton as an "inflation play" may just be the smartest move.

I think significant inflation has already been seeded. I like PMs and other commodities for the short and intermediate term. I do not believe that rate hikes are coming soon, because it would be a death knell to the phantom recovery, and I think that significant debt reduction moving toward a full term election is unlikely, and anything after that is far too late.

Head over to the Silver Wheaton CAPS page and stream your own opinion on its future and how inflation may affect 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.