Some companies are obviously great investments -- in hindsight. Yet for every stock out there screaming "buy me," others simply give us a nudge and a nod. How can we tell tomorrow's obviously great investments from the thousands of pretenders?
The stars' walk of fame
The data shows that stocks achieving five-star ratings on Motley Fool CAPS have outperformed the market by 12 percentage points annually for the first 20 months, and newly minted five-star stocks represent your best opportunity to capture those returns. So let's sift through the proprietary ratings system and find those stocks that could be heading toward stardom. Here are a handful of four-star stocks.
Family Dollar Stores
Some of these names might surprise you. NCR, for example, has been making ATMs and point-of-sale technologies for years. And people might remember that it was founded in 1884, when it made old-time mechanical cash registers. Almost great? Even familiar names can still offer some of the best opportunities. Perhaps we've just forgotten the potential they still hold. However, some of the 125,000-plus CAPS members chose these companies as less obvious sources for tomorrow's great buys, so let's see why they might merit your attention.
In the sight of greatness
The incandescent light bulb has remained essentially unchanged since Thomas Edison developed it more than 125 years ago. While some in Congress want to outlaw the traditional bulb because of its inefficiencies, their preferred alternative of compact fluorescents may be more dangerous because of the mercury they contain.
Solid-state LEDs might be better, and Cree, along with others like General Electric
This company appears to be on the leading edge of LED technology. I believe the benefits of this technology are only beginning to be realized. One application that comes to mind is food production. High-intensity indoor plant lighting has always been synonymous with high-energy, high-cost. I believe LED has the potential to revolutionize greenhouse growing.
Despite a worldwide recession, China's economy will remain an important driver for growth. That's also true for the country internally, where Sohu.com remains a fast-growing player in the field of search and gaming. While Baidu.com
Siding with my Rule Breakers colleague, Rick Munarriz, on this one. Looks like a top grower and its minuscule PEG -- 0.26 as of this writing -- leaves lots of room for analysts to be wrong with their projections. Thumbs up.
A great opportunity for you
These four-star investments may be on their way to five-star greatness, so it pays to start your own 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.
Sign up today for the completely free service and let us hear what you have to say about the great and almost-great companies that interest you.
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