Investors are always hunting for the next big stock -- the dream stock whose price increases several times over when the market finally discovers it. It's easy to look back and see what the 10 best stocks of the past decade were. But for my part, I'm more interested in the tools that can not only help me find new stock ideas, but also have the resources necessary to evaluate tomorrow's greatest companies.
There is such a tool: Motley Fool CAPS, a community of 125,000 members helping one another beat the market.
We've enlisted CAPS to screen for value stocks and get the story behind some of the more highly rated companies. If you want to run this screen yourself, simply click here -- just keep in mind that results will be updated with the market. Here are the parameters:
- A market cap of at least $1 billion.
- A long term debt-to-equity ratio of less than 0.5.
- A current ratio of at least 1.
- A price-to-earnings ratio of less than 15.
Then, we'll tap the collective intelligence of our CAPS members to see whether these companies present real opportunities -- or whether the numbers fail to tell the true story.
Opinions with the numbers
Here's a sampling from the list of stocks our screen pulled up today.
|
Company |
P/E Ratio |
CAPS Rating (out of 5) |
|---|---|---|
|
Freeport-McMoRan (NYSE:FCX) |
3.3 |
***** |
|
ConocoPhillips (NYSE:COP) |
4.2 |
***** |
|
Fluor (NYSE:FLR) |
10.5 |
**** |
|
United Technologies (NYSE:UTX) |
10.8 |
**** |
Data and star rankings from CAPS. All data as of Dec. 19.
Freeport-McMoRan
Acquiring Phelps Dodge last year made Freeport one of the world's largest producers of copper, gold, and molybdenum -- metals whose prices have all have dropped dramatically this year. But while Freeport shares have been in a free fall, many are bullish on the benefits the company could reap with president-elect Obama's stimulus plan because more materials would be needed for construction.
Even production cutbacks and suspending its dividend to save cash hasn't seemed to sway CAPS investors much -- many still see a solid company, with global assets and good management at a much cheaper price. More than 97% of the 5,113 members rating Freeport-McMoRan still expect it to outperform the market.
ConocoPhillips
With oil prices trickling below $40 lately, many energy companies like Valero (NYSE:VLO) and ConocoPhillips have slowed investment in projects and cut back production. The Organization of Petroleum Exporting Countries made its biggest-ever production cut in hopes of bringing balance to supply and demand, but even though the move had little immediate effect, many CAPS members see higher prices in the future, and, hence, a bargain in cheap shares of ConocoPhillips.
Many investors like following Warren Buffett's lead, too -- his Berkshire Hathaway (NYSE:BRK-B) took advantage of Conoco's beaten-down shares recently and purchased about 24 million shares to bring its total holding to about 84 million. More than 97% of the 4,280 CAPS members rating ConocoPhillips are bullish and think it will beat the S&P.
Fluor
This engineering and construction company is another highly rated company that, CAPS members believe, will benefit from increased infrastructure spending in the U.S. and China's infrastructure stimulus plan. The company's wide diversity of projects around the globe and strong track record makes many investors confident in its long-term prospects, even with volatile commodity prices slowing down construction projects in the oil and gas sector. Its earnings beat analyst expectations for the third quarter and it booked a record amount of backlog. In CAPS, nearly 96% of members rating Fluor believe it's well-positioned to fight the ebbing tide and expect it to outperform the market.
United Technologies
This industrial conglomerate has held up well during the recession, reporting strong earnings growth in each quarter this year and even boosting its dividend by 20% on the back of strong free cash flow. While shares haven't fallen precipitously, United Technologies and other cash cows like General Electric (NYSE:GE) are trading well below their 52-week highs, so many investors see good opportunity. Nearly 97% of the 1,278 CAPS members rating United Technologies are bullish.
Let many be the judge
The collective wisdom of a huge pool of investors can help give context to a page of numbers developed through a stock screen. But even with an entire community of qualified opinions acting as the judge, individual investors are still the jury and should perform their own due diligence.
Run your favorite factors through the Motley Fool CAPS screener. It's totally free, and we think you'll like the results.
