Wall Street's Best Hidden Stocks
When asked for the secret of his success, baseball player Wee Willie Keeler replied, "Hit 'em where they ain't." What worked for Willie at the plate applies equally well in investing.
Seeking stocks that others ignore, shun, or simply forget gives individual investors like you an edge over the professionals. When Wall Street turns a blind eye, you have a chance to get in before these stocks get discovered -- or rediscovered -- and start taking off.
Below, we'll check out companies with only a handful of analyst coverage and then pair our list with the opinions of the Motley Fool CAPS community. A stock that garners CAPS' top ratings but hasn't yet caught analysts' attention could be your next home-run investment.
CAPS Rating(out of 5)
Wall Street Picks
Estimated EPS Growth Next Year
|Antares Pharma (NYS: AIS)|
|Boston Beer (NYS: SAM)|
|Hill International (NYS: HIL)|
Sources: Yahoo! Finance, Motley Fool CAPS.
Remember, without much analyst support, you'll have to do your own scouting to see whether these stocks deserve a spot on your portfolio's roster. Don't just buy or sell them based solely on their appearance here.
Moving the needle
Certainly, the decision by Watson Pharmaceuticals (NYS: WPI) to market Antares Pharma's incontinence gel Anturol is going to be one of those developments that transforms the specialty pharma into a big growth stock. With 30 million Americans estimated to suffer from overactive bladder syndrome (half of whom are too embarrassed to discuss it), Antares estimates that there's a $2 billion market to be addressed.
Equally transformative, though, will be its multiproduct deal with Teva Pharmaceutical (NAS: TEVA) for its various drug-injector technologies (Antares sports an interesting mix of needle and needle-less injectors, as well as topical gel-delivery systems like Anturol). In particular, Teva has two abbreviated new drug applications before the FDA for Antares' self-injectable Vibex platform, one using epinephrine and the other an undisclosed drug, both of which could be considered by the end of this year. (Teva also uses Antares' needle-free injection system for its human growth hormone therapy.)
That could be why 96% of the CAPS community rating the pharmaceutical believe it will outperform the broad market averages. Let us know on the Antares Pharma CAPS page whether you think this is an investment worth injecting into our portfolio.
There is no starker contrast between craft brewers like Boston Beer, the maker of Samuel Adams, and the big brewers like Anheuser-Busch InBev (NYS: BUD) , in how they seek to grow sales.
As a means of reversing a 7% drop in shipments last year, Budweiser plans on redesigning its beer cans to make them redder and highlight their bowtie logo. The King of Beers believes that new packaging, which companies typically do every five years or so, will make consumers "re-evaluate their brand choices."
Reminds you of when Molson Coors (NYS: TAP) redesigned its Coors Light cans to "activate" when they reached the right temperature to drink (OK, I've referred to those labels myself when drinking a Silver Bullet).
Boston Beer, on the other hand, apparently believes taste still matters when it comes to deciding what to drink, so it's been rolling out its Freshest Beer Program, an effort to limit the amount of time its brews sit on warehouse shelves. Although it swiped $0.05 a share from earnings last quarter, Boston Beer chairman Jim Koch is willing to forgo profits now because drinkers should have the same flavor he enjoys when he cracks open a "Samuel Adams at one of our breweries."
CAPS member BKITU is willing to put his money where his mouth is, or where his beer goes, as he finds Boston Beer a solid investment: "Boston Beer Company is financially solid, but truth be told I'm just going with this one because I like their products. If you can't root for an upstart beer company that has done well for itself ... well, then I just don't want to know you."
Add the brew master to your watchlist and see whether Samuel Adams can brew up growth and profits from fresh-tasting beer.
Cheap is for me
Fools understand that backlog doesn't neatly translate into future revenues, but it does give you a good guidepost to follow in how business is expected to grow. That's why CAPS member bcguitar33 took a look at the record backlog construction consulting firm Hill International posted and suggested that at less than five times forward earnings estimates, the stock was undervalued.
Revenues in Hill's first quarter jumped 18%, though it recorded an operating loss as it had to suspend construction in Libya because of the war being waged there. The Middle East still represents a huge growth opportunity and was largely responsible for the jump in backlog reported. It recently snared two contracts in Iraq worth $1.5 billion to build housing there.
Only one out of more than 100 CAPS All-Stars rating Hill International thinks it won't beat the market indexes, so add the consultant to the Fool's free portfolio tracker and see whether it's worth building on.
Swing for the fences
When seeking investments where no one else is looking, Motley Fool CAPS is the best place to start your own research. 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.
Sign up today for the completely free service, and tell us whether these hidden stock opportunities will help us get one up on Wall Street.
At the time this article was published The Motley Fool owns, and Motley Fool newsletter services have recommended buying, shares of Molson Coors, Boston Beer, and Teva Pharmaceutical. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributor Rich Duprey has no financial position in any of the stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.
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