I am always looking for a good deal, whether that means buying an extra box of Cocoa Puffs when they're on sale or pouncing on undervalued stocks. The idea that anybody would sell a stock for less than its worth may seem silly, but legendary value investor Ben Graham tells us, by way of allegory, how we can look out for these situations.
In The Intelligent Investor, Graham introduces readers to a crazy guy named Mr. Market. Mr. Market's game is to pay you house calls on a daily basis to offer to sell you interests in businesses he owns or to buy from you interests in businesses you own. Sometimes Mr. Market will show up at your door very excited and offer you premium prices for your holdings, while at other times he'll be totally depressed about the future and will offer to sell you what he has for as low as pennies on the dollar.
So to find some of the stocks that Mr. Market is depressed about, I've turned once again to The Motley Fool's CAPS investor community. Each of the companies below had been given a five-star rating (the highest) by our community of investors just 30 days ago:
|
Stock |
30-Day Return |
One-Year Return |
Current CAPS Rating (out of 5) |
|---|---|---|---|
|
Ituran Location and Control |
(12.8%) |
(11.1%) |
***** |
|
Palomar Medical Technologies |
(10.7%) |
(15.1%) |
***** |
|
GigaMedia |
(10.3%) |
97.6% |
***** |
|
Hurray! Holding |
(10.1%) |
(13.1%) |
**** |
|
Theragenics |
(10.0%) |
30.3% |
**** |
|
Metal Management |
(9.9%) |
63.2% |
***** |
|
Ultra Petroleum |
(9.7%) |
14.8% |
***** |
As the table shows, these stocks are all still very well-regarded by the CAPS community despite their underperformance over the past month. While these are not formal recommendations, they could be a great place to kick off some further research. I'll even get you started with some thoughts on Palomar Medical Technologies.
You're beautiful!
I don't usually put a lot of weight on anecdotal data points, but I think they can often be an interesting jumping-off point for research. That's why my ears perked up during a recent conversation with a doctor in the family. In passing, I asked for a good play in the medical industry -- either a specific company or a general area -- to capitalize on the coming wave of baby-boomer retirees.
I was expecting to hear some of the obvious answers in areas like big pharma, retirement communities, or even biotech. Instead, I got beauty. That's right -- the doctor in question said she expects that the beauty industry, and more specifically the artificial beauty industry, will get a windfall from the aging members of what is often referred to as the "me generation."
Allergan, the company behind everybody's favorite form of botulism (Botox), is certainly one obvious choice for riding this trend. But another interesting route would be to go with an industry that doesn't inject you with neurotoxin proteins to turn back the clock -- namely, the guys who want to shoot you with lasers (and I don't mean Dr. Evil).
My fellow Fool Rich Duprey has already done a lot of work for Fool readers by outlining the cosmetic laser industry and naming a few of the top companies in the arena. One of the companies Rich has singled out as a lead horse in the industry is the same Palomar Technologies that's sitting on our list of stock-market sales above.
Though the stock has taken a drubbing since beginning of the year, it continues to have a strong support base on CAPS, where 278 players think it will outperform the market, versus just 11 who see it underperforming.
One of CAPS' top-performing players, metoo105, thinks Palomar looks like a winner:
Lasers look like an explosive growth space to me as people have their faces more subtly altered than surgery would create. Aging boomers with extended life expectancies will remove those varicose veins with wanton abandon. [Palomar] also makes lasers that remove tattoos which in my opinion should be growth industry in the near term. In addition, they hold a patent on laser hair removal.
So do you think it's time to rescue Palomar from the bargain bin? Or will it continue to get knocked around? Let the community know what you think -- head over to CAPS and share your thoughts with the other 30,000 players currently taking part. Even if you'd prefer to pass on Palomar, you can check out a couple of the other stocks listed above -- or any of the 4,600 stocks rated on CAPS.
More CAPS Foolishness:
GigaMedia is a Motley Fool Global Gains pick. A free 30-day trial to the service is yours. Just follow this link for more information.
Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. You can check out Matt's CAPS portfolio here, or tune in to his CAPS blog here. The Fool's disclosure policy taught Mims what it means to be hot.
