Some companies are obviously great investments -- in hindsight. Yet for every stock out there screaming "buy me," others simply give us a nudge and a nod. How can we tell tomorrow's obviously great investments from the thousands of pretenders?
The stars' walk of fame
The research shows that stocks achieving five-star ratings on Motley Fool CAPS have outperformed the market by 12 percentage points and newly minted five-star stocks represent your best opportunity to capture those returns. So let's sift through the proprietary ratings system and find those stocks heading toward superstardom. Here are a handful of four-star firms approaching greatness.
Babcock & Brown Air
Lloyds TSB Group
Qiao Xing Universal Telephone
Some of these names might surprise you. Pharmaceutical distributor AmerisourceBergen, for example, has been partnering with major pharmas for years to bring both brand-name and generic drugs to a pharmacy near you. Almost great? Even familiar names can still offer some of the best opportunities. Perhaps we've just forgotten the potential they still hold. However, the 110,000-plus CAPS investors chose these companies as less obvious sources for tomorrow's great buys so let's see why they might merit your attention.
An Olympic opportunity
Much of the China story seems to have hinged on the upcoming Summer Olympics. While that investing thesis will exist well past its close, putting on the country's best face has been a primary goal of the government. One area where that has been evident is in bringing 3G mobile phone service to the country. However, it suffered from delays because of China's proprietary mainstay technology.
Now the industry has been restructured ahead of the games and there will be three 3G service providers: China Mobile
With its class action lawsuit behind it, some investors are looking for Qiao Xing to be able to focus on the future. In May, CAPS member dbhealylongonly felt the Olympics may be the game-changing event it has been waiting for:
China. Olympics. Telecom. Also, severely beaten down from their 2007 high. A scandal rocked them, but I think they've taken their licks and will continue to grow. Should also benefit from the Olympic-effect on the Chinese market.
A place to call home
Another Chinese company that ought to do well after the Olympics is real estate services firm E-House as the people use their rising level of wealth to secure better living arrangements. Of course there are challenges ahead, particularly in light of the government proposing to levy taxes on property values rather than just on transactions as it does now. As demand for housing has risen, so have prices, which might put a damper on demand if homeowners have to start paying higher taxes.
Although the chinese govt is trying to slow down growth which will affect real estate, this stock has strong fundamentals and china is going to do well over the long term. Since it is trading near its 52 week low, it is a great buy. The stock seems undervalued at $10. The ceo is also buying back shares. I think it is also being lowered artificially by the U.S. housing downturn and U.S. investors mistakenly spilling over U.S. real estate sentiment into the chinese market. Also, I think moving money out of stocks into real estate when the stock market tanked in the U.S. in 2001 will repeat in China when investors there get scared and want something else to invest in.
A great opportunity for you
These four-star investments could be on their way to five-star greatness and at Motley Fool CAPS your input influences whether they climb to the highest rung.
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