3 Stocks Approaching Greatness
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" 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 this handful of stocks on their way to fame.
As the 180,000-plus CAPS members have chosen these companies as less obvious sources for tomorrow's great buys, let's see why they might merit your attention.
In the sight of greatness?
If the economy is making a second trip to hell in a handbasket, it's understandable why Wal-Mart and Buffalo Wild Wings are quickly becoming investor favorites again.
Wal-Mart, of course, makes the most sense. Its low-prices-every-day value proposition will allow consumers to stretch their scarce dollars. Even though rising commodities prices will result in a shopping cart costing more than it did a year ago, it's still going to be lower than what shoppers would generally get at a Safeway or Kroger supermarket.
Even in non-food areas, Wal-Mart is able to beat the competition -- competition, by the way, that has at times taken lessons from the world's largest retailer and turned them against it. But with the all-important back-to-school season upon us, Wal-Mart has beaten out Target (NYS: TGT) and Sears Holdings' (NAS: SHLD) K-Mart chain, according to a recent Bloomberg analysis, besting its rivals with better pricing on a diverse basket of items.
That's going to be important for customers facing the inevitable costs associated with sending their children back to school, a point CAPS member RSkvinski considers key.
With all the attention in the average family given to "tightening the belt" (commercials have begun to target this, which is why I assumed the idea is widespread), I'd imagine that shoppers will move from their favorite stores to Walmart.
On the surface, wings-and-beer chain Buffalo Wild Wings might not be as obvious, but the search for value will bolster its bottom line. Right now McDonald's (NYS: MCD) is a clear favorite, but when it comes to dining, consumers also look for something extra, and B-Dubs has that special sauce. It might carry an earnings premium compared to the burger joint, but consider the growth prospects the two have and Buffalo Wild Wings looks like the better bet.
The small-cap restaurant has a smaller footprint than its global rival, but it's growing faster than it. Buffalo Wild Wings plans on opening 32 company-owned stores in the U.S. and Canada while franchisees plan on opening 37, giving the company 13% store growth for the year.
For its part, McDonald's is looking to open 1,100 new stores, a huge number to be sure, but with almost 33,000 stores worldwide as its base, that's store growth of just 3%. I wouldn't count out McDonald's by any means, but Buffalo Wild Wings offers an equally attractive investment profile, particularly as we move into the sweet spot of its year, football season.
CAPS member TheDufer thinks the chicken wing palace has a few years to go before it hits a growth ceiling.
Still expanding, this company will not peak in the next few years and while other franchises such as Fridays, Uno's, and other chains crumbled through the "depression" Buffalo Wild Wings navigated through and will scoop up their customers.
Let us know on the Buffalo Wild Wings CAPS page if you view this as a finger-lickin'-good investment.
A win-win situation?
If B-Dubs is a head-scratcher for some investors, drug developer Santarus must be having them pulling their hair out.
It still hasn't recovered from the patent ruling loss related to its heartburn medicine, Zegereid, that it suffered last year or from the recall of Glumetza by marketing partner DepoMed (NAS: DEPO) . It suffered another setback when the FDA issued a "refuse to file" letter for its application for Rhucin to treat hereditary angioedema, a rare disease that causes intense swelling.
But don't think it's dead in the water. Santarus has been active launching an authorized generic of Zegereid, a tactic often used to blunt the impact of regular generics, and just inked a new deal with DepoMed wherein it will start booking U.S. revenues from DepoMed beginning September 1 while getting hold of most U.S. commercial activities for the drug. And earlier this month the FDA agreed to changes in the trials Santarus will run on Rhucin that should help ease the application process.
All but one of the nearly three dozen CAPS All-Stars rating the drug developer think it can beat the market on its own, so let us know in the comments section below if you think it's wise for Santarus bulls to feel so self-assured.
Follow all of its developments by adding its stock to the Fool's free portfolio tracker.
A great opportunity for you
Investor sentiment suggests these four-star investments still seem to be on their way to five-star greatness, but it pays to start your own research on these stocks on Motley Fool CAPS. 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 let us hear what you have to say about the great and almost great companies that interest you.
At the time this article was published The Motley Fool owns shares of Buffalo Wild Wings and Wal-Mart. Motley Fool newsletter services have recommended buying shares of Buffalo Wild Wings, McDonald's, and Wal-Mart. Motley Fool newsletter services have recommended creating a diagonal call position in Wal-Mart. 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 does not have a financial position in any of the stocks mentioned in this article. You can see his portfolio here. The Motley Fool has a disclosure policy.
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