For every stock out there screaming, "buy me," others simply give us a nudge and a nod. While all the attention might be focused on their five-star peers, we can sift through Motley Fool CAPS to find four-star stocks giving us the "high sign" that they're approaching greatness.
These opportunities -- including familiar names and beaten-down companies -- rank higher than most of the other 5,400 starred companies, and it pays to investigate their potential. For consideration today I have a pair of stocks on their way to fame and glory.
1-Year Revenue Growth
1-Year EPS Growth
1-Year Stock Return
Source: Motley Fool CAPS.
As the 180,000-member CAPS community has chosen these two companies as less obvious sources for tomorrow's great buys, let's see why they might merit your attention.
In the sight of greatness
After reading the headlines, you're probably feeling confused right now about how the auto industry is performing. Don't worry; it's not your fault. The media can't decide how best to describe what's going on. From MarketWatch we learn "Big Three Auto Sales Soar in May" while Reuters tells us "May sales disappoint; demand slows." And not to be outdone, Business Insider informs us that sales fell below 14 million units for the first time this year in May, but "Detroit and Japan surge." Seems we have it all covered.
While all three Detroit carmakers did indeed see sales grow, with Chrysler up 30%, Ford coming in 13% higher, and General Motors
Overall, U.S. sales from all carmakers, including Japan's Toyota, Honda, and Nissan, which reported exceptionally strong gains -- but not surprising since their sales flatlined after last year's earthquake-tsunami -- were up 26%. But as Business Insider reports, that puts the seasonally annually adjusted rate at 13.7 million units, well below the 14.5 million analysts were anticipating, somewhat troubling since last month had two extra selling days compared with 2011.
Yet it's also clear that Ford remains a healthy carmaker steadily growing sales, particularly of its trucks, which saw sales jump 20% year over year. With its shares off by more than a third from recent highs and trading at just two times trailing earnings and less than six times estimates, CAPS member RumbachStock suggests this is an excellent time to buy the stock, if not one of its cars: "Solid brand name, great competitive [advantages], consistent earnings, low valuation."
Take two and call me in the morning
The fallout from the battle between Walgreen and Express Scripts
Also benefiting has been CVS Caremark
Walgreen has a continuing contract with Medco that remains in effect, so a big risk for it is if the benefits manager consolidates its contracts and makes the drugstore chain choose all or nothing. There doesn't seem to be any reason it wouldn't do that, so I have a tough time seeing Walgreen coming out ahead here. That puts me amongst the minority of CAPS members who overwhelmingly see it outperforming the broad market indexes.
Some 94% of the 2,209 members rating the drugstore believe it will beat the Street, including assassin17, who sees it winning in the market even if it loses to Express Scripts: "3% dividend yield, great balance sheet, consistent operating margins over the past 5 years (2011 actually better than previous two years), consistently growing sales until recently, and stock is down 15% from recent highs."
A great opportunity for you
Investor sentiment suggests these four-star investments are on their way to five-star greatness, but cars and drugs might be hurting, while the smartphone and tablet revolution is still gaining legs. You can read The Motley Fool's report on three hidden winners of the iPhone, iPad, and Android revolution to find out more. This report will be available only for a limited period. Get it before it's gone!
Fool contributor Rich Duprey holds no position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of Express Scripts Holding, General Motors, and Ford and creating a synthetic long position in Ford. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.