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 system, they rank higher than most
of the other 5,300 rated 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 that might be
approaching greatness. Here is a handful:
ClickSoftware Technologies (Nasdaq:
CKSW)
Dow Chemical (NYSE: DOW)
Internap Network Services (Nasdaq:
INAP)
Kraft (NYSE: KFT)
Zix (Nasdaq: ZIXI)
Some of these names might surprise you. Consumer goods
giant
Kraft, for
example, has been a household name for generations, though it
has only been
two years since it was spun offfrom
Altria .
Almostgreat? Even familiar names can still offer
some of the best opportunities. Perhaps we've just forgotten
the potential they still hold. However, the 140,000-plus CAPS
members 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?
ClickSoftwarehelps businesses stay on schedule, and more
importantly on -- or under -- budget. Its products help
clients schedule, monitor, and manage their service
operations, with the goal of increasing efficiency and
reducing costs.
CAPS member
EnigmaDuderecently wrote that the corporate efficiency
specialist
had a schedule of its ownthat he was able to profit
from.
I recently read how in each of the past 6 quarters the
stock has run up prior to the earnings report and then
drops on the news (or the next day).Â
Fortunately, I was able to take advantage of this bit of
historical knowledge. I sold my shares at $7.75 yesterday
and today their earnings report came out. Although they
reported record profits and forecast inline with estimates
for next quarter, the share price plummeted nearly 20%. I
added more shares today at the new, lower price of
$6.40.
There is some evidence to support that idea, though it's
hardly conclusive. What I found more intriguing was that
ClickSoftware has climbed fairly steadily over the past year
as
Accenture (NYSE: ACN),
IBM (NYSE: IBM), and others have helped
integrate and implement its software for customers to contain
their costs. ClickSoftware's stock responded in kind, rising
more than 120% in the past 12 months and more than 170% this
year alone. That seems to underscore the opinion of
ChetGib, who is buying and holding.
For me . . . I bought Click for the
long termbased on criteria for growth. That potential
does not go away based on 1 days reaction to next quarters
performance. If I had the cash, I would buy more now.
The market's reaction to the latest earnings report was
predicated on ClickSoftware's forecast of fourth-quarter
revenues that would be flat or down compared with the third
quarter, even though they'd still be as much as 14% higher
than a year ago. With the acquisition two weeks ago of
AiPoint, an Israeli company with similar decision support
solutions, ClickSoftware will move into fields such as
retail, telecommunications, transportation, and
utilities. Continued... |