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 a little bit 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.
CAPS Rating(out of 5)
Wall St. Picks
|AuthenTec (NAS: AUTH)||****||4||144%|
|Northgate Minerals (ASE: NXG)||****||2||2,000%|
|Sturm, Ruger (NYS: RGR)||****||2||12%|
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 just buy or sell them based solely on their appearance here.
Hiding in plain sight
Fingertip identification has provided AuthenTec a foundation to build upon. As your wallet migrates to your cellphone, the biometric identity verification specialist is looking to capture the growing business to be found in mobile computing and near-field communications.
AuthenTec is growing from just a fingerprint recognition company into an end-to-end security management services provider. And not a moment too soon. While Hewlett-Packard and Dell (NAS: DELL) still rank up there as some of its most important customers, the PC market is undergoing a revolution that had AuthenTec stayed true to its base, might not have survived the turmoil the industry is going through.
A series of acquisitions have allowed the biometrics shop to offer not only smart fingerprint sensors, but USB fingerprint readers, identity management software, and embedded hardware and software products. And it recently announced a collaboration with NXP Semiconductors (NAS: NXPI) to create secure NFC mobile payment solutions.
NFC is a technology that allows communication over very short distances -- typically just a few centimeters. Using a smartphone, a user can touch the phone to an NFC tag and immediately be connected to a website, dial a phone number, launch an app, or make payment transactions.
CAPS member brodriguez88 says the market is still unaware what AuthenTec brings to the table, providing investors with an opportunity to get in early: "Leader in NFC payments. Still has not proven to the markets what its capable of."
Let us know on the AuthenTec CAPS page if the fingerprint recognition specialist is nearing a big payoff.
Castles in the sky
Gold miner Northgate Minerals might have been running under the cover of darkness past much of Wall Street as only two analysts had been tagging it on CAPS, but more than 1,600 community members had seen the opportunity it represented and overwhelmingly expected it to outperform the markets.
But AuRico Gold (NYS: AUQ) -- formerly known as Gammon Gold -- caught the scent, too, and recently offered to buy Northgate for $1.5 billion, a 45% premium to where the shares traded the day before the announcement. The combined company likely creates the premier mid-tier gold miner that will have five operating gold mines, a sixth scheduled to begin producing next year, and three more under development.
With Northgate a hot commodity these days -- Primero Mining had offered to buy it before AuRico came along -- CAPS All-Star Guin3666 is hoping there's yet another, higher bid in the offing.
Good gold stock that is being taken over... hoping for another higher bid to emerge. If not then the combo with Gammon (I don't like the new name!) will work fine.
Add the gold miner to your watchlist and see if it can attract still more interest.
Gunning for growth
According to the FBI's NICS data, background checks for firearms purchases are running 15% ahead of last year. While the law enforcement agency says you can't necessarily extrapolate background checks to gun sales -- there's no one-to-one correlation -- one can still make the assumption if there are more people looking to buy guns more sales ought to be coming the gun makers' way.
Additional evidence can be found in the performance of Sturm, Ruger, whose shares have doubled so far this year and are up 140% over the last 12 months. While the performance of Smith & Wesson Holding (NAS: SWHC) might prove the FBI's case -- its stock is down 20% year over year -- but even it expects sales to be up 10% for the year, which as fellow Fool Rich Smith notes, might be a lowball number since backlog last quarter was up 153%.
With gold up "only" 50% this year (as represented by the SPDR Gold Trust), CAPS All-Star Chemdawg says guns have been a better trade than gold.
goes up when gold goes up....apparently you need something to protect your gold with...solid dividend
Add the gun maker to the Fool's free portfolio tracker and see if it's worth taking aim at.
Swing for the fences
When seeking investments where no one else is looking, Motley Fool CAPS is the best place to start your own 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 Fool contributor Rich Duprey holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of NXP Semiconductors and Dell. 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.
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