Stocks on the Road to Greatness

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For every stock out there screaming, "buy me," others simply give us a nudge and a nod. While their five-star peers get all the attention, we can sift through Motley Fool CAPS to find four-star stocks giving us the "high sign" that they're approaching greatness. 

These opportunities -- including familiar names and beaten-down companies -- rank higher than most of the other 5,400 starred companies, and it pays to investigate their potential. For consideration today I have a pair of stocks on their way to fame and glory.

Company

Market Cap

1-Year Revenue Growth

1-Year EPS Growth

1-Year Stock Return

Antares Pharma (NYS: AIS)

$319 million

28%

0%

87%

YPF (NYS: YPF)

$11.7 billion

23%

(16%)

(30%)

Source: Motley Fool CAPS; NM = not meaningful.

As the 180,000-member CAPS community has chosen these two companies as less obvious sources for tomorrow's great buys, let's see why they might merit your attention.


In the sight of greatness
Because the market really didn't grasp the nature of Antares Pharma's business, the stock was crushed when BioSante Pharmaceutical failed to gain FDA approval for its "female Viagra" that used Antares' topical gel as a delivery system. Had investors taken the time to delve into the biotech's business, it would have realized that its gel business is only a small part of what it does; the real meat and potatoes is in injectables.

Most of Antares' revenues come through Teva Pharmaceuticals (NAS: TEVA) and privately held Ferring Pharmaceuticals, which buy its reusable needle-free injectors, disposable pressure-assisted auto injectors, and disposable pen injectors. Injectables are a $120 billion market.

Not that it's not hoping for a big return on its gel business. The FDA's approval of Watson Pharmaceuticals' Anturol for the treatment of overactive bladder, a condition that has an addressable market worth $2.1 billion and growing to by 2014, should bolster sales going forward and highlight the potential of the delivery system.

Antares has two gel products already on the market and another in development, but it's obvious the injectables market is the driver right now. Its stock has doubled in value after the BioSante implosion as the situation clarified, and with the broad collaboration it has with Teva, along with a licensing agreement inked with Pfizer (NYS: PFE) , additional markets will be opening soon for the biotech.

With 95% of the 173 CAPS members rating Antares believing it will outperform the broad market indexes, it's clear the investment community thinks this stock is worth injecting into your portfolio. Add Antares Pharma to your Watchlist to receive notification of new product approvals and licensing agreements it signs.

Nationalization is theft
As ExxonMobil (NYS: XOM) and ConocoPhillips discovered with Venezuelan strongman Hugo Chavez, doing business in countries with animosity toward market principles can lead to the outright theft of your property. It's a constant back-and-forth discussion about whether Argentina will nationalize YPF's local units, with the most recent news indicating that it won't.

The oil and gas industry still labors under price controls enacted after the country's economic default in 1999, leading to massive underinvestment in its resources. Oil production has fallen 20% in the past decade, according to an analysis by BP. Yet it sits on massive untapped reserves. YPF discovered almost 23 billion barrels of shale oil at its Vaca Muerta field, which EOG Resources says could surpass production at Eagle Ford in the United States.

For all that, Argentina is trying to stifle the energy company. Two local provinces pulled four oilfield licenses that will cause it to lose 7% of its output; opposed the payment of dividends to shareholders; and may require it to boost production, regardless of the financial consequences. There's a very real fear that Kirchner may follow Chavez in renationalizing the company.

No doubt, CAPS members are counting on having that not happen. For me, it's just too much risk, and I've made a CAPSCall for YPF to underperform the market.

With Argentina's economy on the decline, the political class will look to deflect any downturn onto others, and the oil companies are an easy target. CAPS member givitsound admits it's a bit of a gamble siding with YPF here: "It's a crap shoot with the government wanting to take over profits or at least regulate them. If the government stays out this will easily double though."

Add YPF to the Fool's free portfolio tracker, and let us know on the YPF CAPS page or in the comments below whether you think it's a matter of when, not if, Argentina moves against the oil and gas producer.

A great opportunity for you
Investor sentiment suggests that these four-star investments are on their way to five-star greatness, but if you're looking for additional dividend-paying opportunities, I suggest you check out "Secure Your Future With 11 Rock-Solid Dividend Stocks," a special report from The Motley Fool about some serious dividend dynamos. I invite you to grab a free copy to discover everything you need to know about these 11 generous dividend payers.

At the time this article was published Motley Fool newsletter serviceshave recommended buying shares of Teva Pharmaceutical Industries, ExxonMobil, and Pfizer. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days. The Motley Fool has adisclosure policy.

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