For every stock out there screaming "buy me," others simply give us a nudge and a nod. While the five-star stocks get all the attention, we can sift through Motley Fool CAPS to find four-star stocks giving us the sign that they're approaching greatness.
These opportunities -- including familiar names and beaten-down companies -- rank higher than most of the other 5,400 starred companies in CAPS, and it pays to investigate their potential. For consideration today, consider this handful of stocks on their way to fame.
Our 170,000-plus CAPS members have chosen these companies as less obvious sources for tomorrow's great buys, but let's see why they might merit your attention.
In the sight of greatness?
Being the dominant player in the niche gives you standing in the markets, allowing your stock to command a premium. But it also means the competition is gunning for you and the game is yours to lose. Analysts are starting to suspect that Skyworks Solutions is facing just those sort of challenges.
As a leading chip provider for the smartphone market, particularly the Apple iPhone, it recently saw revenues widen by 37% and adjusted profits jump by 71% while providing guidance that was ahead of analyst expectations. But the sky's no longer the limit for Skyworks. RF Micro Devices
Skyworks is seeking to protect its dominant position, though, and it's been scooping up some smaller chip players, including Advanced Analogic Technologies and fabless semiconductor maker SiGe Semiconductor. The former purchase gives it a set of complementary power-management products, while the latter enhances its wireless-networking portfolio.
The main concern for investors will be potential hiccups in integrating the two companies, which taken together total about half a billion dollars. But CAPS member rcjansen isn't too worried, because the strength of the mobile Internet market is changing the dynamics.
Regular [seasonality] (reduction of 8-10%) in EPS in the first quarter of the year did not happen for Skyworks. They remain the leader in providing chips for the mobile phone and tablet market. With the trend toward smart phones continuing and the more complex (meaning expensive) chips required for them should keep Skyworks on the upward [momentum] train for the next 2-3 years.
The stock is down 38% from its 52-week highs. Let us know on the Skyworks Solutions CAPS page whether you think it will see blue skies again.
A stinging rebuke?
Maybe it's not exactly a clean bill of health, but two Justice Department reports that TASER's stun guns are not "dangerous" when properly deployed, are safer, and present a lower risk to those being subdued is a boost to the less-than-lethal device maker. It's been receiving large follow-on orders as well as big, new international orders, continuing its comeback.
The growing backlog of business comes as even traditional gun makers such as Smith & Wesson Holding and Sturm, Ruger
With more than 92% of the more than 1,100 CAPS members rating the stun-gun maker to outperform the broad market averages, it's clear that investors believe TASER will be able to make a stunning comeback. You can follow along by adding the stock to the Fool's free portfolio tracker and see whether the growing number of orders provides a shock to the system of its naysayers.
A solid opportunity
Xyratex, it seems, never participated in the rally among data-storage providers. Where even recently lagging performer STEC was able to show a 44% increase in value year over year (despite being down more than 18% over the past three months), Xyratex is off more than 40% in the past 12 months.
Maybe it was the strong performance at its peers that had Xyratex investors thinking the rising tide would lift its boat too. The CAPS community has been bullish, with 94% of those rating the stock see it beating the market averages, but its stock hasn't managed to keep pace. Its rising CAPS rating could be related to the low multiple the market has assigned to it. At some point, the stock may be just too cheap to ignore, either by investors or by rivals who might want to snag it for themselves. Western Digital's
You can store Xyratex on your watchlist and keep track of all the news and analysis about this storage-sector play.
A great opportunity for you
Investor sentiment suggests that these four-star investments still seem to be on their way to five-star greatness, but it pays to start your own 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.
Sign up today for the completely free service, and let us hear what you have to say about the great, and almost great, companies that interest you.
The Motley Fool owns shares of Qualcomm, Western Digital, and Apple. Motley Fool newsletter services have recommended buying shares of and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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