Wall Street hates the companies mentioned in today's column. 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
CAPS Bullish Sentiment
Plexus (NAS: PLXS)
Frontline (NYS: FRO)
Pain Therapeutics (NAS: PTIE)
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.
A short circuit
Contract electronics manufacturer Jabil Circuit beat analyst forecasts last month, as a combination of market-share gains, new customer wins, and new production from existing customers helped drive 23% growth in revenues, as well as earnings that more than doubled last year's effort.
That might bode well for Plexus, since it indicates an environment that remains somewhat resilient despite the dicey economic outlook. Plexus provides services to original-equipment manufacturers in the networking, wireless infrastructure, and medical sectors, among others.
Even though the wireless sector is hot, Plexus saw its largest customer, Juniper Networks (NYS: JNPR) , get hit such that analysts think Juniper may have to cut some 10% of its workforce, though the company confirmed only a "small number of positions" being eliminated. Part of Plexus' problem is that competition remains intense, but other analysts think its focus on complex -- albeit low-margin -- work will allow it to maintain its industry-leading profitability while contributing to double-digit growth down the road.
Although analysts remain evenly divided on its prospects going forward, CAPS All-Stars overwhelmingly see Plexus succeeding, with almost 94% of those rating the contract electronics manufacturer seeing it moving ahead of the broad market averages.
Add Plexus to your watchlist then head over to the Plexus CAPS page, and let us know why you think it's going to win.
The pall the tanker glut is casting over the shipping market is likely to have far-reaching effects years down the road. Depending on which shipping companies survive this downturn, it will affect how Frontline, DryShips (NAS: DRYS) , and Nordic American Tankers (NYS: NAT) all respond to future boom cycles. The collapse of charter rates has led some shippers to use "slow steaming" tactics and suspended dividends, leading to a general drop in value among industry players. Earlier this summer, Frontline's CEO said he's looking for the industry to "collapse" within the next two years.
Unlike the Baltic Dry Index, which rebounded from its lows earlier this year, the Bloomberg Tanker Index seems to reach new depths with each passing day. Frontline is second only to Teekay, which ships 10% of all the world's oil supply, in weighting on Bloomberg's tanker index.
CAPS member Teacherman1 says that despite its troubles, Frontline remains a solid shipping investment: "They are struggling like all of the tankers, but I have a lot more faith in their management than I do in most of the others. I believe it will prove to be a good longer term hold at this price level."
You can tell us on the Frontline CAPS page or in the comments section below if you agree, and then follow its progress by adding it to your watchlist.
House of pain
Drug developer Pain Therapeutics has been in a world of pain since June, when the FDA sent a complete response letter notifying it and Pfizer (NYS: PFE) that Remoxy, its abuse-resistant formulation of oxycodone, was a no-go over concerns about chemistry, manufacturing, and controls for the medicine. The taffy-like capsules prevent oxycodone from being crushed, snorted, or injected, in line with FDA directives that drug developers devise ways to limit the abuse of their drugs by foiling an addict's ability to extract the active ingredients from them.
Pfizer previously warned investors that manufacturing issues might hamper its ability to get approval, and Pain Therapeutics says it may take a year or more to work through the concerns.
With 92% of CAPS members still rating Pain Therapeutics to outperform the market indexes, it's apparent they're willing to wait. You can tell us on the Pain Therapeutics CAPS page or in the comments section below if you think it can work through the concerns, and then follow its progress by adding it to the Fool's portfolio tracker.
What's wrong with that?
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At the time thisarticle was published Fool contributorRich Dupreyholds no position in any company mentioned. Check out hisholdings and a short bio.Motley Fool newsletter serviceshave recommended buying shares of Pfizer. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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