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 all the attention might be focused on their five-star peers, 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've got 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

Buffalo Wild Wings (NAS: BWLD) $1.6 billion28%31%39%
Terex (NYS: TEX) $2.6 billion47%89%(32%)

Source: Motley Fool CAPS.


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
Is sports-beer-chicken maven Buffalo Wild Wings about to veer off into craziness and start buying up pancake houses? CEO Sally Smith said the chain was exploring "potential concepts for acquisition" it could franchise nationally that would have broad appeal and not be a niche idea. Buffalo Wild Wings might not be eyeing DineEquity's IHOP chain or Yum! Brands Pizza Hut, but it's looking for something that would similarly work from coast to coast.

The fact is the company doesn't have to try loopy ideas to continue growing. Revenues were up 38% and franchise fees rose 13% -- while comps soared 9.2% and 7.3% at company-operated and franchised restaurants, respectively -- with same store sales already up almost 7% in the first four weeks of the second quarter. While chicken costs are always a prevalent concern and consumers having a lot of options to choose from in casual dining experiences, B-Dubs has plenty of room to grow in its own niche without running off onto such strange tangents.

Whatever its future growth prospects, highly rated CAPS All-Star JaysRage thinks the current lull between sports seasons isn't the best time to buy:

Love love love the company. Love the business model. Love the growth prospects. However, I also know the business model well enough to know that this is the dead zone time for BWLD. After March madness earnings, it's a great time to sell this cyclical stock. Buy back in a few months when it's in the middle 60s.

Does expanding into new concepts portend better earnings ahead, one that would smooth out its cycle, or is it a classic example of diworsification? Add Buffalo Wild Wings to your watchlist and tell me in the comments section below or on the Buffalo Wild Wings CAPS page if you think they're just winging it.

More than a threadbare opportunity
The Institute for Supply Management's manufacturing index stood all expectations on their heads and jumped to 54.8% for April, well ahead of the 53.4% it recorded in March and confounding analysts that expected it to pull back to 53%.

Crane maker Terex and industrial products distributor MSC Industrial Direct (NYS: MSM) should be heartened by the machinery respondents who say demand is better than it has been in a while: "In general, demand remains strong for products, and we [are experiencing] more supply disruptions now than four to five months ago."

Yet those supply disruptions could come back to haunt the industry, particularly as fabricated metal products makers think Europe's financial crisis may make the recent gains they've seen a temporary phenomenon.

Terex, though, beat analysts' expectations on the top and bottom line last quarter, reiterating guidance for this year's earnings of between $1.65 and $1.85 per share as aerial work platform and materials processing improved. Not everything was rosy as road-building equipment demand was weak but it sees its construction segment improving. With a goal to continue expanding margins throughout its operations by increasing prices and continuing to control costs.

That's fine with the CAPS community where 98% of those rating the crane specialist see it beating the broad market averages all on its own going forward. Add Terex to the Fool's free portfolio tracker and let us know on the Terex CAPS page or in the comments below if the ISM's signals are actually crossed.

A great opportunity for you
Investor sentiment suggests these four-star investments are on their way to five-star greatness, but while computers and related companies might be hurting, the smartphone and tablet revolution is still gaining legs. You can read The Motley Fool's report on three hidden winners of the iPhone, iPad, and Android revolution to find out more. This report will be available only for a limited period. Get it before it's gone!

At the time this article was published Fool contributorRich Dupreyholds no position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of Buffalo Wild Wings.Motley Fool newsletter serviceshave recommended buying shares of MSC Industrial Direct, Buffalo Wild Wings, and Yum! Brands; and writing covered calls on Buffalo Wild Wings. The Motley Fool has adisclosure policy. We Fools may not 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.

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