Dream Stocks for Mining Investors

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 a tool that offers a variety of resources to help with finding tomorrow's leaders: Motley Fool CAPS, a 125,000-member community of investors helping each other beat the market.

We've enlisted CAPS to screen the mining sector and get the story behind some of the more highly rated stocks. CAPS' nifty screener will help us find stocks with:

• A market cap of at least $100 million.
• A three year average annual revenue growth rate of at least 20%.
• A price-to-earnings ratio of less than 25.
• At least 300 people making a call on the company.

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
Below is a sample of stocks our screen returned (and you can run it as well -- remember that your results might be different as the market changes).

Data and star rankings from CAPS as of Jan. 16.

Vale
Iron ore producers Vale, Rio Tinto, and BHP Billiton (NYSE:BHP) control more than 70 percent of the market for seaborne ore, and are being pressed by Asian steelmakers to cut prices by more than 40%. But the miners are delaying any commitments in the hope that demand will increase over the next few months, giving them an edge in negotiations.

Even with the pricing pressure the ore producers face, though, many investors believe that lower iron ore stockpiles in China and stimulus packages geared toward infrastructure from major governments will help grow demand. As such, Vale remains a highly favored stock in CAPS, with more than 97% of the 6,039 members who've rated the company expecting it to outperform the market.

Barrick Gold
With $1.7 billion in cash, a stockpile that could be used to buy companies and projects rendered exceptionally cheap by the current market environment, Barrick Gold is well-positioned to take advantage of these leaner times. The company has grown through several acquisitions in recent years, and last week it brought new CEO Aaron Regent on board to replace Greg Wilkins who came down with a serious medical condition last year. As a chartered accountant with acquisitions experience, Regent will oversee the portfolio of 27 existing mines and investors hope his business experience will lead to more growth. In CAPS, 95.5% of the 1,707 members rating Barrick Gold expect it to beat the S&P.

Rio Tinto
Miner Rio Tinto has been taking steps to cut back on payrolls and projects in response to the economic slowdown, as its iron ore production slowed in the fourth quarter. Like Vale, many investors expect the company to manage its way through the bear market well, and to be well-positioned when the turnaround comes. While shares in many miners have bounced off their lows, fourth-quarter earnings reports are coming soon, and the news could get ugly again. Still, many investors think the best- positioned miners have good long-term potential, and 96.4% of the 1,241 CAPS members rating Rio Tinto today are bullish.

Cliffs Natural Resources
Similar to steelmakers like ArcelorMittal (NYSE:MT) and many other miners like Anglo American (NASDAQ:AAUK), Cliffs Natural Resources is dramatically cutting back production for 2009 as it waits out the recession. But Cliffs knows green; the company has grown its levered free cash flow at a rate of more than 57% over the last five years. And some predict that upcoming infrastructure spending will boost demand for its metallurgical coal and iron ore, leading 97% of the 938 CAPS members rating Cliffs Natural Resources to vote the way of the bull.

Let 125,000 members 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.