Think of investor sentiment as a pendulum that swings in tandem with a company's share price. When investors begin to think highly of your company, its stock might also start heading in the right direction. Alas, you can rarely tell when investors are warming to a stock until after it's made that upward swing.
An astrolabe for investors
But Motley Fool CAPS' proprietary ratings, aggregated from the opinions and accuracy of 98,500-plus investors, offer a great way to monitor investor sentiment. Like astronomers scanning the skies, investors can follow a stock's stars through its CAPS rating trend, tracking investor sentiment to help determine the best time to invest. Let's look at one- or two-star-rated companies that have recently enjoyed a bump in investor confidence, and see whether the stars are really aligning in their favor.
|
Company |
CAPS Rating |
Recent Price |
1-Yr Return |
|---|---|---|---|
|
Research In Motion |
*** |
$123.66 |
181% |
|
JPMorgan Chase |
*** |
$46.97 |
(7%) |
|
Cirrus Logic |
*** |
$7.53 |
(13.2%) |
|
China Sunergy |
*** |
$8.53 |
(48.5%) |
|
Jabil Circuit |
*** |
$10.78 |
(52.7%) |
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.
High-efficiency sunlight
As hot as the solar industry was at the end of 2007, the subsequent sell-off in many of the industry players revealed the need for reliable supplies of polysilicon as a key factor in continuing growth. China Sunergy was seen as one of the lower-tier solar stocks, not in the same class as Suntech Power
Perhaps it simply needed a management shakeup. While much of China Sunergy's anticipated polysilicon supply is coming from new entrants into the market, it's also converting its four existing production lines to higher-efficiency products, which will carry product margins as much as 8% to 12% higher than existing cells.
There are still challenges facing China Sunergy, of course. The industrywide polysilicon shortage should remain in place for some time, thus raising costs and keeping investors cautious about fulfilling needs. And to continue offering products with maximum efficiency in converting sunlight to energy, the company will have to keep shelling out more money for future upgrades like those currently under way on its production lines -- or risk falling behind the competition's offerings.
Investors like alsh15see changes coming that ought to help boost China Sunergy, such as anticipated increased spending by the Chinese government on solar solutions and the eventual -- yet still hoped-for -- easing of polysilicon supply problems:
This company will recieve benefits from the chinese government spending on solar later this year. This price is revealing the correction in the alternative energy market.
Silicon Supplies are due to increase in the beginning of next year, this will benefit CSUN, and make it rallly to 11.5.
Others, like CAPS player 21popsontop, aren't so sure China Sunergy can make such a quick turnaround. Last December, 21popsontop foresaw more work necessary on the company's end before the beaten-down solar stock becomes a viable investment:
Company seems to have many problems turning a profit or even making ends meet in an industry others are kicking butt and taking names, but it is a good one to follow on the pump and the dump, as it seems to take that course regular. Any company can get turned around, but they will have to do some major changes to this one. I say catch it on the next low enjoy the waves and dump. Maybe one day they will get it turned around but I would not hold my breath.
Shine your starlight
So will China Sunergy shine on? Well, we haven't yet heard from you, and at Motley Fool CAPS, every investor's opinion counts. Your voice could determine whether these stocks become shooting stars or supernovas. Since it's free to sign up and post your thoughts, why not use this opportunity to take your star turn?
