Finding Stocks at a Fever Pitch

The collective power of thousands of investing minds is the driving force behind Motley Fool CAPS, a leading investor-intelligence community. Membership has actually grown to more than 110,000 investors: professionals, novices, and every level in between. You can join, too.

One of the service's unique features is the ability to not only rate a company on whether you think it will outperform or underperform the market, but to express why you think it will, in as much detail as you want. These analyses, or "pitches," can be as simple as "This stock has a low P/E ratio," or as complicated as a multipage, footnoted thesis. In the context of the overall assessment of the stock, a pitch is another data point to consider.

Throwing strikes
Useful analyses are those that give salient details about a company and its prospects -- on both the bull and bear side -- and the best ones earn recommendations. Not everyone can become famous picking stocks and detailing their reasons, but we call the investors who merit the most recommendations for their analyses our "pitch-writing superstars." Let's look at these top investors and some of their best recommendations and get a sense of what makes up strong analyses and winning investing.

tuffsledding is not only a top pitcher who's received nearly 500 recommendations for his pitches, he's also an All-Star with a 99.87 player rating. Here are a few of his most recent stock picks.

*CAPS score is how many points a pick is beating (lagging) the S&P 500 since the call was made.

It's all in black and white
Graphics-card maker NVIDIA painted a pretty stark picture for the immediate future, and it quickly became one of the worst stocks on the market, getting dropped 30% by investors. While the semiconductor industry as a whole also fell, NVIDIA revised its guidance to cut revenue by 15% and announced that it would be taking a $150 million to $200 million charge for defective chip products.

The market's reaction didn't sit well with investors like top-rated CAPS All-Star ShockBroker:

Oh that makes me mad! A 30% drop was totally uncalled for! The whole sector and economy at large is hurting, you can't blame [NVIDIA] for being honest and admitting it's going to shave 15% off their sales, like everyone else this quarter. The $150M mfg error, well, that's a shame, but it's a one-time charge.

In three months, the economy won't improve, but I trust them to not screw-up on that scale again... Factor in ATI who aren't doing well either as their only competition and the fact that Nvidia products are top-drawer.

Rigging the game
Sangamo Bioscience's zinc finger DNA-binding proteins could be a tasty morsel for investors if the deal with Dow Chemical (NYSE:DOW) continues to pan out. The technology could be used to produce healthier cooking oils, create disease-resistant plants, and even lead to better crop yields, which had Dow last month exercising its option to license Sangamo's therapies.

The rich potential of the deal has CAPS investors like ResearchLover salivating:

Dow agrisciences is partnering with Sangamo to build a portfolio of designer GMO/transgenic crops (Forbes, Jun 2). Designer zinc fingers for gene targeting make sense, and Sangamo seems to hold the IP underlying commercialized use of the technology. Therefore, given a year or so, pending lucrative results for Dow, I would expect that one of the cash-rich agriscience companies would eye the company for buyout.

Inside pitches
Now, just because a top-rated All-Star investor writes a top-recommended pitch for a company is no cause to go out and buy or sell its stock. You still need to perform your own due diligence. But it's worth considering what they've said as you make your decision.

A Foolish stance
Step up to the batter's box of Motley Fool CAPS and make your opinions known. Since CAPS is a completely free service, throw as many pitches as you like at the stocks of your choice. You'll be helping your fellow investors to make better investing decisions.