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 110,000-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 and track 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.


CAPS Rating (Out of 5)

Recent Price

Next Year EPS Growth

AVANT Immunotherapeutics (Nasdaq: AVAN)




Cytori Therapeutics (Nasdaq: CYTX)




Indevus Pharmaceuticals (Nasdaq: IDEV)




Lexicon Pharmaceuticals (Nasdaq: LXRX)




Sequenom (Nasdaq: SQNM)




Sources: Motley Fool CAPS, Yahoo! Finance.

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. 

Shooting blanks
The world of biotech investing is fraught with hazards, as Indevus Pharmaceuticals found out when the FDA delayed approval of its male hypogonadism drug Nebido over concerns about reactions at the time of injection. That setback will result in not only an additional 18 months of testing, but the CEO has also canceled his retirement party to help steer the company through the re-evaluation.

CAPS player llgrout fully recognizes the dangers lurking here and cautions others to do likewise, but this investor expects Indevus to rise in the future.

This one has taken some recent hits, however it is ripe to make a come-back. However, this is a real gut check, as all indicators still show negative earning estimates, so there is a high risk here. This sector is very much a gamble anyhow, because one set back with trials, fda, etc and it will drop like a rock. One breakthrough, however will change all this. Some times you have to take a few "calculated risks" and that is exactly what I am doing with this one. Maybe not the greatest pitch I ever wrote, but I want to [make it clear] that caution is the key word with this one.

Two to tango?
Not only will FDA delays cause a setback, but also if your partners dump you because of a lack of blockbuster results, you end up having to scramble to find a new one. AVANT Therapeutics has thus far avoided that scenario, and Pfizer (NYSE: PFE) must be happy with the recent brain-cancer drugs AVANT reported. Moreover, it also just recently announced a new partnership with 3M (NYSE: MMM). Yet the possibility of getting suddenly jilted is one of the reasons CAPS player zzlangerhans believes that AVANT will underperform the market: "After reviewing biotech stocks for the last year, I've seen how little these collaborations mean. The larger pharma will just drop the small cap like a cow pie as soon as the compound shows less than stellar results in a phase II or III trial."

Shine your starlight
So are these biotechs still healthy? 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?

Pfizer is a Motley Fool Income Investor selection. Pfizer and 3M are Motley Fool Inside Value recommendations. Try any of our Foolish newsletter services free for 30 days.

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