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 125,000-plus members, 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. Data suggests that CAPS' highest-rated stocks performed best while the lowest rated did worst, so let's look at previously rated one- or two-star 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 |
Next Year |
|---|---|---|---|
|
Cooper Tire & Rubber |
*** |
$6.06 |
107% |
|
Microvision |
*** |
$1.76 |
(4%) |
|
Red Hat |
*** |
$12.37 |
(27%) |
|
Thomson Reuters |
*** |
$28.91 |
NA |
|
Vail Resorts |
*** |
$24.26 |
(11%) |
Source: Motley Fool CAPS, Yahoo! Finance.
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.
The sun's always shining somewhere
Earlier this year Microvision shares were decimated by a dubious report that a division of Texas Instrument
With Microvision's own products still pretty much in development stage, it seems that CAPS member newvoice may have pegged it right when this member noted its relationship to sci-fi gadgetry even if he ultimately does like the company's potential.
An exciting prospect in the sci-fi to reality arena. From big media projecton from small devices, to that ultimate of star trekkian gizmos --the holographic projection--this little company has big potential.
Plenty of room at the inn
The hospitality industry is in the midst of what may be one of the worst markets it has seen since the Great Depression as revenue per available room, or RevPAR -- an important industry metric -- is expected to drop 7.8% in 2009, the fifth worst annual decline since 1930.
Luxury resort operator Vail Resorts has managed so far to sidestep the worst of the market's woes. While advanced bookings were down 23% last quarter from the year before, it still managed to sell $70 million worth of "Mountain Club" memberships, which range in price from $275,000 each for underground parking privileges down to $150,000 for "social" memberships. Getting a good spot close to the door apparently is worth the cost to the rich.
Yet CAPS member dalefromvail sees the economics of it all eventually catching up with Vail making it possible that the stock will plummet:
Some of the economics is built in to the current price, but they will miss earnings estimates by a huge number and the price will go a lot lower. Tourism forecast for this winter in Colorado is severly bad, and real estate development isn't any better. Picture the stock skiing off a cliff.
Shine your starlight
So are these stocks driving ahead or ready to crash? It pays to start your 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. Then weigh in with your own thoughts on which stocks you think are 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?
