Surprises are part of the game when it comes to picking stocks. Take Monday's announcement that XM Satellite Radio and Sirius are finally going to try to link up. It's something that many, notably honorary Rule Breaker Jim Cramer, have been pushing for, but it still seemed like a long shot. As I write this, XM and Sirius are up 10% and 6%, respectively.
And so it goes with expectations.
We see it all the time during earnings season as companies play the "meet, beat, or miss" game. When a company reports earnings that differ from investors' and analysts' expectations, the market reacts by tweaking the price of the stock -- sometimes rather violently. And since trying to predict earnings for next quarter or next year is an extremely challenging task, it's good policy for investors to expect that expectations are generally wrong.
Turning once again to The Motley Fool's CAPS community, where investors from all walks of life can weigh in with their thoughts on nearly 3,800 stocks, I've come up with a handful of unloved stocks that have been defying naysayers over the past month. Each of the companies below had been given a one-star rating (the lowest) by our community of investors just 30 days ago:
|
Stock |
30-Day |
One-Year | |
Current |
|---|---|---|---|
|
First Solar (NASDAQ:FSLR) |
72.9% |
NA |
** |
|
Systemax (NYSE:SYX) |
58.5% |
341.1% |
* |
|
Novelis (NYSE:NVL) |
49.9% |
139.9% |
* |
|
Fieldstone Investment (NASDAQ:FICC) |
47.6% |
(54.8%) |
* |
|
Acorda Therapeutics (NASDAQ:ACOR) |
45.0% |
309.0% |
* |
|
Maxwell Technologies (NASDAQ:MXWL) |
41.9% |
(19.9%) |
** |
|
Canadian Solar (NASDAQ:CSIQ) |
41.2% |
NA |
* |
So are these stocks better than CAPS players thought, or are they just having (solar pun alert) one last day in the sun (sorry)? Though CAPS players bumped First Solar and Maxwell Technologies to two stars, the rest of the group stayed grounded at one. Of course, the best way to get a feel for where these guys are headed is to dig in and do some research. I thought I'd kick you off with some thoughts on the solar industry.
Solar power has been on tap over the past month, which is why First Solar and Canadian Solar are on this list. I didn't include fellow solar player Trina Solar, since it was part of a one-star roundup earlier in the month, but Trina is also up a smokin' 84.9% over the last month. With a few exceptions, Fools haven't been overly surprised by solar's success. For Valentine's Day, I professed my love for solar power in general, while fellow Fool Jack Uldrich singled out Suntech Power to heap his amore on. And speaking of Suntech, the Rule Breakers pick is a four-star selection in CAPS, and it's beating the S&P by 20 percentage points since David Gardner and team singled it out last June.
There's a lot to love about solar power in the abstract. As an alternative energy source, it can provide good, clean power without many of the controversies of ethanol. As a business, it's also seen some significant success, and some companies, like Suntech and Trina, have been able to grow like weeds while producing significantly profitable results.
Government-sponsored incentives are one knock on the industry, though. Countries like Germany, Spain, and Japan, which are some of the largest solar consumers, have rebates and incentives in place to encourage the use of solar equipment. Japan, though, has shown that it's possible to increase sales of solar systems while phasing out incentives -- in the last 10 years, Japan has installed nearly as much solar capacity as the rest of the world combined, while decreasing incentives from 50% of the system cost to 10%. Last week, fellow Fool Mike Norman took an even deeper look and shone a little light on solar.
On the CAPS boards, a lot of players are riding the momentum of the solar stocks, which have been the second-best-performing group in CAPS' Tags feature. There are plenty of others, though, who see the long-term potential for companies in the solar industry. CAPS All-Star Uther606 shares:
"First Solar's non-silicon product doesn't produce as much energy per square inch as the silicon stuff, but it's so much cheaper that the cost per watt produced is way down. And with growth and ramped up production, costs will only get better. I think this is where the future of solar lies."
slo1111 has similarly positive thoughts when it comes to Suntech:
"[Suntech is] expected to grow earnings 70% this year. It needs to deliver to justify its high P/E, but they are expanding into Europe and continue to land contracts among other ventures that will keep growth strong. The long term trend in this industry is excellent as the industry leverages sun power. The drive into the consumer market for homes has not even begun. There will be a time when it is standard to have photocells on new homes and Suntech Power will be poised to take advantage of this overall growing market."
Do you share (solar pun alert No. 2) a similarly sunny opinion of solar power (sorry)? Or do you think rain clouds are on the way for the industry? Head over to CAPS and let the community know what you think. While you're there, you can start your research on any of the other five stocks listed above -- or any of the 3,800-plus stocks on CAPS.
More CAPS Foolishness:
Suntech Power is a Rule Breakers pick, while XM is a former selection of that service. To see which other companies are currently making the cut, check out a free 30-day trial of the newsletter.
Fool contributor Matt Koppenheffer didn't see these particular moves coming, but he's rarely surprised at Mr. Market's general tomfoolery. He owns shares of Suntech Power. The Fool's disclosure policy is here to provide the comforting hugs of certainty in our world of the unexpected.
