5 Cold Stocks Heating Up

When a stock's share price is lower than a North Dakota thermometer in February, investors tend to give it the cold shoulder. But as the market warms to a stock's prospects, its price can heat up in a hurry. Alas, you can rarely tell that a stock is melting investors' hearts until after it's made that upward leap.

Taking the market's temperature
But Motley Fool CAPS' proprietary ratings, aggregated from the opinions and accuracy of 160,000-plus members, offer a great way to monitor investor sentiment. Following a CAPS rating trend can help us determine the best time to invest. Let's look at previously rated one- or two-star companies that have recently enjoyed a bump in investor confidence and see whether they're truly heating up -- or headed back to the deep freeze.

Source: Motley Fool CAPS.

Obviously, 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. 

Caution: Contents may be hot
Reading Hartford Financial Services recent earnings release might not have given you even cold comfort that it's got a brighter future. Although it managed to beat expectations last quarter and it gave decent guidance for the coming year, it also said that financial turmoil increases the likelihood it's going to get it wrong no matter what. So you might want to take what they're saying with a grain of salt. That's what CAPS member yesterdaysnews is doing, saying the time to have bought Hartford was last year:

You should have bought this stock at $3.33 last year-man you're milking this thing.

Want another reason-they just hired a top executive from [American International Group (NYSE: AIG)]. Not only has he been part of an organization that you are going to be financing for the rest of your life, you probably will let him reduce your portfolio value-silly you.

A cure for what ails you
It might not be Rite Aid's recent improvements that has investors thinking twice about exiting the pharmacy chain. Walgreen's (NYSE: WAG) acquisition of rival Duane Reade has CAPS members speculating Rite Aid may now be a target too. baileymadison says even Wal-Mart Stores (NYSE: WMT) might want to consider a purchase of the chain:

Watch them get bought, or some of the stores. Walgreens, [CVS Caremark (NYSE: CVS)], or even Wal Mart will be in the hunt

CVS Caremark might be the stronger bet, as it would provide an easy means of expanding its footprint. With Rite Aid's continuing difficulties, it remains an attractive candidate for whoever might want in.

Building a support structure
CAPS member glenninn believes the auto industry is going to continue to move its supply chain to countries where costs are lower, which will ultimately benefit Chinese auto parts and components maker China Automotive Systems:

Automotive industry will shift sourcing to least-cost markets. As [China Automotive's] business grows, it will benefit from improving manufacturing quality and experience. This should provide all upside for the near future, barring any unforeseen management mistakes.

Yet the country ought to have no problem generating sufficient demand on its own. According to the China Association of Automobile Manufacturers, sales volume jumped 124% there in January over the year-ago period while output soared 143%. It fully expects production to hit 15 million cars in 2010. China Automotive should be able to supply plenty of systems and components without needing to look to the U.S. for business.

Checking the mercury
Are these stocks invitingly warm or bitterly frosty? It pays to start your research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page. Then weigh in with your own thoughts on which stocks you think are hot little numbers, and which offer cold comfort. It's free to sign up.