Wall Street's Best Hidden Stocks
Seeking stocks that others ignore, shun, or simply forget gives individual investors like you an edge over the professionals. Getting in before Wall Street discovers them -- or rediscovers them -- means you can stake a claim before they start taking off.
Here we check out companies with minimal analyst coverage at best, 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.
No. of Wall St. Picks
Wall St. Bullish Sentiment
Est. EPS Growth Next Year
|Taseko Mines (ASE: TGB)||****||2||100%||133%|
|North American Palladium (ASE: PAL)||****||2||50%||553%|
Source: Motley Fool CAPS.
Remember, without much analyst support, you'll have to do more digging on your own to see whether these stocks deserve a spot in your portfolio, so don't just buy or sell them based solely on their appearance here.
Digging up trouble
It probably shouldn't be too much of a surprise that copper and molybdenum miner Taseko Mines reported a loss in the fourth quarter as copper concentrate sales volume fell 39% from the year-ago period. But the company said it was a timing issue on shipments, which suggests Taseko will fare better in the coming quarters.
Taseko wasn't the only copper miner experiencing troubles, as Freeport-McMoRan (NYS: FCX) guided to lower first-quarter production as a result of the strike at its Grasberg mine, where operations have only just restarted. Both companies are counting on a stronger market for their return, and copper prices are rebounding as hints of economic revival spread. I remain unconvinced of any sustained recovery.
The U.S. economy is only feeling the impact of the Fed's monetary policies, which are artificially inflating values. And with China's economy weakening -- it's the largest copper consumer in the world -- the inflation we're witnessing in asset prices may soon deflate. While Southern Copper is currently insulated from the hard landing China's experiencing, since only a small portion of its output is sold there, I think the long-term outlook for Taseko is positive too. With shares rebounding from their lows, they're still more than 40% below recent peak prices.
The Prosperity mine in British Columbia is getting a second look by the Canadian government, and CAPS member apurimac believes that's key to future success: "If the Canadian Govt. approves their large gold site, they'll boom. If not, they still have some great holdings and future possibilities."
Add Taseko Mines to the Fool's free, personalized stock-tracking service and see how long it stays off the grid of the analyst community.
A rich patina
Another miner hoping the economy gets back on its feet is palladium miner North American Palladium. Closely tied to the auto industry -- one of the principal uses of palladium is in catalytic converters -- NAP and Stillwater Mining (NYS: SWC) watch with interest the rate of car sales each month, and February saw buyers fall in love all over again with automobiles.
All three U.S. automakers saw sales rise, handily beating analyst expectations. Ford sales jumped 14.4% last month while Chrysler's sales soared 40%. Even the government's favorite carmaker, General Motors, saw sales rise, though they barely inched higher at 1.1%. Gas prices are at record levels for this time of year, but that hasn't yet dented enthusiasm for cars.
Both NAP and Stillwater need a strong auto industry. Stillwater's foray into copper and gold by buying Peregrine Metals last summer met with criticism and a big share-price drop last year. Similarly, NAP's attempt to diversify into gold mining didn't pan out as anticipated, as it had to put its Sleeping Giant mine to sleep after not being able to make it economical. Although it still has its Vezza mine to tap that rich vein of resources, palladium will continue to be its primary product and that means car sales need to keep revving higher.
CAPS member dgarant sees North American Palladium stepping on the gas this year.
NA auto demand soaring. Palladium prices rising, stock was hit unfairly in 2011 because of rare earth bubblish type losses. Stock fundamentals appear to be good. Electric cars will only represent 2% of automobiles on road by 2020. Demand for Palladium will be strong for a long time. Plus e-test regulation in china will become stricter in the future.
Let us know on the North American Palladium CAPS page whether you think there's open road for it to travel upon, and add it to your watchlist to be alerted to any speed bumps it might hit.
Swing for the fences
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At the time this article was published Fool contributorRich Dupreyowns shares of North American Palladium, but he holds no other position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of Freeport-McMoRan and Ford.Motley Fool newsletter serviceshave recommended buying shares of General Motors and Ford, as well as creating a synthetic long position in Ford. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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