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, 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.
Wall St. Picks
|21Vianet Group (NAS: VNET)||*****||0||44%|
|AgFeed Industries (NAS: FEED)||****||2||438%|
|Coeur d'Alene Mines (NYS: CDE)||****||5||20%|
Source: 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 buy or sell them based solely on their appearance here.
Hiding in plain sight
It's been an inauspicious start for 21Vianet Group, to say the least. The Chinese provider of Internet datacenter services stumbled right out of the IPO gate, with its stock falling 50% after going public in April. But like other Chinese IPOs that fell upon their release, notably Renren (NAS: RENN) and Qihoo 360 Technology, 21Vianet has bounced back.
Its first-quarter earnings results at least gave investors reason to be hopeful. Describing itself as the largest carrier-neutral Internet datacenter services provider in China, revenues more than doubled and adjusted net profit nearly quadrupled. Think of it as a Chinese Cisco (NAS: CSCO) , since the network provider is also an investor in 21Vianet.
Unlike so many other small-cap Chinese stocks these days, CAPS member JohnsonQFree says you don't have to fear an investment in 21Vianet: "This is not one of the Chinese stocks to heap skepticism on. Legitimate company with nicely rising revenues."
Let us know on the 21Vianet Group CAPS page what you think of the stock.
A pig in a poke
Introducing Western-style hog farming practices is considered key to turning around AgFeed Industries' business. Beset by flash floods throughout China and hampered by unwise acquisitions, the hog farmer is hoping it can learn a thing or two from Smithfield Foods (NYS: SFD) and Tyson Foods (NYS: TSN) .
It recently acquired U.S.-based pork processor M2P2 and just picked up two more pork processors, Kansas City Sausage and Pine Ridge Farms. With a new president recruited from McDonald's, AgFeed is looking to feed the world, or at least its insatiable desire for growth.
With almost 1,300 CAPS members weighing in, 96% rate AgFeed to outperform the broad market averages. Add the hog farmer to your watchlist to see if it will be left hog-tied.
Cheap is for me
Silver miner Couer d'Alene Mines saw its stock cut by 40% when the bull run in silver prices collapsed earlier this year. While gold has charged ahead to new record highs, silver trades for around $40 an ounce, well below its peak.
Couer d'Alene is still scheduled to make hefty profits, as it is one of the top low-cost silver miners around, with a cash cost of around $4 an ounce. As the politicians fumble debt-limit negotiations in Washington, gold and to a lesser extent silver is seen as a safe haven investment.
Of course, one of the things that holds silver back is that it's seen as more of an industrial metal with commercial applications, so it's going to be tied more closely to the economy than gold will be. Still, CAPS member idvst8 sees the miner as an "extreme value":
With Metal sales expected to be roughly 1B for 2011, this stock is trading at only 2X sales, and roughly 5X net profits. At some point the Market will realize, that CDE is a Cash cow moving forward, and the infrastructure and properties owned by the company are worth nearly double the current stock price.
Add Coeur d'Alene Mines to the Fool's free portfolio tracker and see if it's worth its weight in gold.
Swing for the fences
When seeking investments where no one else is looking, Motley Fool CAPS is the best place to start your 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 go one up on Wall Street.
At the time this article was published The Fool owns shares of and has created a bull call spread position on Cisco. Motley Fool newsletter services have recommended buying shares of Cisco and McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.Fool contributor Rich Duprey owns shares of Cisco but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.
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