As we enter a time of year known for big bellies (and by the way, here's to a happy holiday season), it's more important than ever to refocus our efforts on finding small companies. That's because ...
- Underfollowed small-cap stocks offer incredible rewards.
- Wall Street is covering fewer stocks than ever before, making now a great time to start looking for mispriced small caps.
Our methodology
Unlike Motley Fool Hidden Gems, where our team of just six analysts uses bottom-up, fundamental analysis to ferret out small-cap recommendations, this column uses our brand-new Motley Fool CAPS community-intelligence database, where the ideas of thousands of people help uncover promising stocks. The system, which is still in beta testing, asks investors to rate stocks either "outperform" or "underperform." In turn, each investor is rated, as is each stock.
The end result? While only huge or exciting companies such as United Technologies (NYSE:UTX) or VeriSign (NASDAQ:VRSN) have more than 20 or so analysts following them, CAPS harnesses the ideas of thousands to provide the "long tail" of the stock market with the same depth of coverage.
Drumroll
, please ...
So without further ado, here are five five-star CAPS stocks that few to no professional analysts are covering.
|
Company |
Mkt. Cap* |
CAPS Users |
Analysts |
Analyst Consensus |
|---|---|---|---|---|
|
Amerigon (NASDAQ:ARGN) |
$188 |
32 |
3 |
Buy |
|
Applix (NASDAQ:APLX) |
$167 |
29 |
4 |
Buy |
|
Landec (NASDAQ:LNDC) |
$243 |
39 |
4 |
Hold |
|
Live Nation (NYSE:LYV) |
$1,510 |
24 |
4 |
Buy |
|
SM&A (NASDAQ:WINS) |
$106 |
26 |
3 |
Buy |
*In millions.
As always, these stocks are offered not as formal recommendations, but rather as ideas worth researching further. That said, if you're interested, SM&A is an interesting little company that we've previously highlighted in our Hidden Gems service. Although the defense-industry consultant is down more than 30% since we took a look at it, there's been some uncertainty in that business lately, given the recent elections. With its asset-light business model, this company could continue to benefit as government spending rises.
Want to learn more about these or any other undercovered small caps? Start by reading through what other investors have to say about them in CAPS. Just click here to join the free beta test today.
Tim Hanson does not own shares of any company mentioned. The Fool's disclosure policy pities the fool who doesn't have a disclosure policy of his own.
