Wall Street hates the companies we'll discuss here. So why do our Motley Fool CAPS members disagree? They've bestowed on these companies the highest four- and five-star ratings, signaling their faith that the associated businesses will outperform the market.
So who has it right? The professional class of analysts sitting in their paneled offices smoking stogies, or a motley crew of community investors pooling their best thoughts for others to share? We think we know who'll come out ahead. How about you?
CAPS Rating(out of 5)
No. of Analysts
Wall Street Bearish Sentiment
France Telecom (NYS: FTE)
Hudson City Bancorp (NAS: HCBK)
K-Swiss (NAS: KSWS)
Source: Motley Fool CAPS.
Now, as much as we love our CAPS community, don't buy these companies just because they've garnered top ratings. And don't sell 'em just because Wall Street says to, either. Investing requires closer diligence on your part, so use these ratings as a launching pad for your own research.
Orange you glad we're not Europe? France Telecom, operator of the key brand Orange, has a dividend yielding almost 9% these days while its stock trades for less than 8 times forward earnings estimates, offering investors the potential for nice returns during the Continent's financial crisis.
In a situation where even the IMF is going to need a bailout so it can keep refinancing Europe's weakest links, some of the best international dividend stocks -- and telecoms in particular -- are looking attractive. Spain's Telefonica (NYS: TEF) yields 9.7% and trades at 7.5 times estimates while the U.K.'s Vodafone (NYS: VOD) goes off at more than 8 times next year's earnings while yielding 7.8%.
France Telecom, which is moving to change its name to Orange completely, looks especially interesting. It just won a 4G mobile spectrum license, along with three other French telecoms, and it is partnering with Telefonica and Vodafone to offer retailers a common mobile payment and advertising platform. While exposure to the Continent is great, it offers diversified coverage and is domiciled in a country with arguably some of the more stable finances around.
The telecom's dividend is what's attracting CAPS members like sk8terman and concealedweaponR, who says it's a steady payout: "the dividend percentage being steady and share steady compounding over time would beat the [market's] average."
Dial up additional commentary on the France Telecom CAPS page and add the stock's ticker to your watchlist to see if the European financial crisis causes its value to disconnect.
A rare breed
The financial crisis, whether international or domestic, is wreaking havoc with even the most conservative of banks, like Hudson City Bancorp, which earlier this year posted its first quarterly loss since going public. It rebounded this past quarter to return to profitability, though it was significantly lower than last year. Yet it saw credit quality improve and loan loss provisions fall away, dropping 40% from a year ago.
There is a certain rising tide that's lifting all the financial boats, with KeyCorp improving its credit profit, but with others like Flagstar Bancorp (NYS: FBC) unable to record profits, Hudson City looks like a star still.
CAPS member alabarba believes Hudson City is a well-run bank that's been hit too hard, joining more than 700 others in the investment community believing it will go on to outperform the market indexes.
You can watch Hudson City continue its recovery by adding the financier's stock to the Fool's free portfolio tracker.
A certain disconnect
Although footwear maker K-Swiss didn't trip over a fad like fellow sneaker maker Skechers (NYS: SKX) , it's still worn some holes in its soles by racing its rival to the bottom. K-Swiss' stock trades at just a third of its 52-week high, while Skechers is only off 41%, but it could be in the running for a rebound.
Second-quarter sales jumped 40%, and worldwide futures orders shipping between July and December rose nearly as much. Its domestic business is pacing its comeback with a 43% increase in revenues, and management is waiting to see how its new marketing effort pays off. While Wall Street might not give much credence to the effort, the CAPS community does, with 93% of the CAPS All-Stars rating the footwear star to beat the market.
Follow along by adding K-Swiss to your your watchlist, and have all the news and analysis about its progress aggregated in a single location.
What's wrong with that?
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At the time thisarticle was published Fool contributor Rich Duprey owns shares of Skechers USA, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Telefonica and KeyCorp. Motley Fool newsletter services have recommended buying shares of France Telecom and Vodafone Group. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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