When a stock's share price is lower than a North Dakota thermometer in February, investors tend to give it the cold shoulder. But as the market warms to a stock's prospects, its price can heat up in a hurry. Alas, you can rarely tell that a stock is melting investors' hearts until after it's made that upward leap.

Taking the market's temperature
But Motley Fool CAPS' proprietary ratings, aggregated from the opinions and accuracy of 140,000-plus members, offer a great way to monitor investor sentiment. Following a CAPS rating trend can help us determine the best time to invest. Let's look at previously rated one- or two-star companies that have recently enjoyed a bump in investor confidence, and see whether they're truly heating up -- or headed back to the deep freeze.


CAPS Rating
(out of 5)

Recent Price

EPS Estimates, Current Year
& Next Year

Helicos BioSciences (NASDAQ:HLCS)



($0.28) & ($0.09)

Nektar Therapeutics (NASDAQ:NKTR)



($1.12) & ($1.24)

Newcastle Investment (NYSE:NCT)



($6.42) & ($0.16)

Strategic Hotels & Resorts (NYSE:BEE)



($0.28) & ($0.44)

Wendy's/Arby's Group (NYSE:WEN)



$0.17 & $0.25

Source: Motley Fool CAPS.

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. 

Caution: Contents may be hot
Last month Helicos BioSciences shook up the market by announcing that it was finally making sales of its genetic testing equipment. The company reported that the number of instrument installations doubled during the second quarter, and also touted its first multi-systems sale. Now another new sale will enable genetic tests that investigate various disease areas, including cardiology and endocrinology.

Better yet, Helicos announced that its technology was successfully used to directly sequence individual RNA molecules without going through the intermediate step of generating complementary DNA, which can introduce errors. That'll come in hand for researchers investigating genomes, cancer, and common diseases.

Helicos' shares have bounded higher as it reported this string of happy news. CAPS member NEMnyWtch recently blogged that although she bought the shares on a whim, once upon a time investors were willing to pay $17 a stub when the technology hadn't even proven itself. Now that it's the real deal, this CAPS player is willing to believe that the stock has a better-than-average chance of going higher again.

Red hot or ice cold?
Wendy's/Arby's Group has a value menu that rivals McDonald's (NYSE:MCD), and a taste that is far superior (in my estimation). But sports an enterprise value that trades at 14.8 times Capital IQ's calculation of free cash flow, compared to around 23.5 times for the Golden Arches. That's not bargain-basement pricing, but it might just suggest that Mickey D's is overvalued at the moment. With the restaurant chain in the midst of a serious turnaround, Wendy's looks attractive.

CAPS member MATTALANKANE thinks the chain looks good enough for someone to eat -- Yum! Brands (NYSE:YUM), maybe. But tpsrpt thinks Wendy's can compete on the strength of its menu alone:

Love those frosties!!! And the chili, chicken sandwiches, side caesar salad, sometimes the baked potato. Which is all I need, but they are making improvements/additions to the menu, which is an added plus. Arby's is ok...kind of pricey, good value when they do that 5 items for $5 thing. Company should improve with international growth and introduction of new products.

Checking the mercury
Are these stocks invitingly warm or bitterly frosty? 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 hot little numbers, and which offer cold comfort. It's free to sign up.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.