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 firms approaching
greatness. Here are a handful we've recently
unearthed.
Telefonos de Mexico (NYSE: TMX)
BHP Billiton (NYSE: BHP)
China Green Agriculture (NYSE: CGA)
Hercules Offshore (Nasdaq: HERO)
Ebix (Nasdaq: EBIX)
Some of these names might surprise you. BHP Billiton, for
example, has been a giant in the oil and gas industry for
years.
Almostgreat? Even familiar names can still offer
some of the best opportunities. Perhaps we've just forgotten
the potential they still hold. The 145,000-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?
Marketing its agricultural products through
distributors has been a profitable structure for
China Green
Agriculture. Now, the company has decided to sidestep the
middlemen for its next phase of growth, and open its own
retail stores. While this has the potential to boost sales,
it also risks alienating China Green's distributor network
and end-users, who might not like the layer of competition
the stores represent.
Fiscal first-quarter results (ending Sept. 30) were
impressive, with sales jumping 27% and operating profits
rising to 55% of revenue. As business has boomed, so has
China Green's stock. Shares are up 35% over the past three
months, and they've rocketed more than 400% higher in the
past year.
In part, that's because Chinese stocks in general have
performed well. The 320 stocks that make up the
China
sectoron CAPS have risen 140% in the last 12 months,
while Fertilizer stocks are up more than 300%. Both sectors
have been fueled by the likes of China Green Agriculture and
China Agritech (Nasdaq: CAGC), which has
poured on the afterburners and leaped more than 3,400% year
over year.
Yongye International (Nasdaq: YONG) hasn't
been a slouch, either, rising 333% over the same period.
China Green, a
Motley Fool Global Gains
recommendation, even "
spiffy-popped" in mid-November. That's the term Fools use
to describe a one-day stock price jump greater than the
original price paid for that stock.
Global Gainsoriginally recommended China Green
Agriculture at $2.30; after its latest earnings release, it
jumped up $3.51 in one day. Today, shares trade hands at more
than $17 each.
Of course, some investors are leery about the course China
Green's stock will take going forward after such a fast price
rise. CAPS member
Technodweebenumerates
several itemsthat have him worried about the company:
1. Looking at their SEC filings, the future intentions
to give away 2 million in shares, with a vote coming up
soon with regard to compensation. There may be even more
share give-a-ways in the future.
2. Private placement (there have been two this year) are
supposed to be offered to current shareholders first. Yes,
companies still do this. In Singapore, Genting did this.
But with CGA the "offer" goes to some private party
elsewhere. Continued... |