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
On
Motley Fool CAPS, these opportunities can be found among
our four-star stocks. In CAPS'
proprietary ratings system, they rank higher than most
of the other 5,300 starred companies, but they're
just shy of superstardom. While all the attention might be
focused on their five-star peers, we can sift
through CAPS to find four-star companies approaching
greatness. Here are a handful.
Altria (NYSE:MO)
Amylin Pharmaceuticals (Nasdaq: AMLN)
CME Group (NYSE: CME)
Intuitive Surgical (Nasdaq: ISRG)
iShares Silver Trust (NYSE: SLV)
Some of these names might surprise you. Cigarette giant
Altria, for example, has endured years of litigation, spun
off
Philip Morris International (NYSE: PM) to
focus on the domestic market alone, and hid behind a made-up
name to cover its relationship to the cigarettes it makes.
Almostgreat? Even familiar names can offer some of
the best opportunities. Perhaps we've just forgotten the
potential they still hold. However, the 140,000-plus-member
CAPS community chose these companies as
less obvious sources for tomorrow's great buys, so let's
see why they might merit your attention.
In the sight of greatness?
Exchange-traded funds offer investors an accessible
means of trading in a sector without having to determine
which company will be the eventual winner. While many
precious-metals miners might ultimately win if
inflation returns with a vengeanceas many fear, betting
on the actual metal itself, whether it's gold or silver, is
an easier method of enjoying the increase in its value.
Thus with Peter Schiff predicting gold will hit $5,000,
and silver expected to
come along for the ride, buying
SPDR Gold Shares (NYSE: GLD) or the
iShares Silver
Trustprovides investors with a hedge against inflation.
Both stocks actually have assets backed by the precious
metals rather than investments in specific companies mining
or trading them. CAPS member
Smittyhsees a basket of commodities ultimately becoming
more valuable:
Inflation is coming. It will not take a year for the
printing of money to catch up with the value of a dollar.
Commodities and mining will reap huge profits as the dollar
devalues. My favorites are silver, zinc, copper and
gold.
Time to bulk up
It's a standard of comedians that the list of possible
side effects from a drug is oftentimes worse than the actual
illness itself. If the disease doesn't kill you, the cure
will. The Fool's pharmaceuticals guru, Brian Orelli, notes
that all the FDA
fire bells ringing in the nightmight actually desensitize
doctors to real dangers in some medications. When
everything'sa risk, then there's no need to discern
meaningful differences.
This all came to pass recently in part because of the
regulatory agency's alarmist note that some patients on
diabetes drugs Januvia and Janumet develop pancreatitis. That
was the
same warningthe FDA gave to
Amylin
Pharmaceuticals'Byetta that ultimately sank sales.
Lacking in the warnings is context: How many would have
developed the condition anyway since diabetics are prone to
develop pancreatitis, along with the miniscule number
contracting the illness relative to those who are taking the
drug.
Since then, Amylin and partner
Eli Lilly restructured things to cause a
resurgence in sales and place in their hands a
potential blockbuster. While CAPS member
topsecret09thinks the
stock salesby a top institutional shareholder are a
warning sign,
jo1935has looked at Amylin's valuation across a variety
of metrics and finds it to be relatively cheap: Continued... |