Wall Street Needs to Get Behind These Stocks
Wall Street can't generate enthusiasm for the companies listed below. 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 while Wall Street offers lackluster support at best.
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)
Number of Analysts
Wall Street Bullish Sentiment
CAPS Bullish Sentiment
|ATP Oil & Gas (NAS: ATPG)||****||12||58%||97%|
|Sequenom (NAS: SQNM)||****||11||45%||92%|
|Synovus Financial (NYS: SNV)||****||15||60%||87%|
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 dry hole
With $2 billion in debt and just $172 million in cash, there's little wonder why investors are concerned about the financial viability of independent energy specialist ATP Oil & Gas. Its operations are focused on the Gulf of Mexico, which obviously were affected first by BP's (NYS: BP) oil spill, then the Obama administration's moratorium on permitting and foot-dragging when it was ordered by the courts to let drillers back.
ATP does have other assets in the North Sea, but with its Gulf operations constrained and limiting the availability of cash, the worry is that it may not be able to fund its work there.
Payments on the heavy debt load are coming due soon, and some analysts are concerned about its ability to make the $1.5 billion in interest payments. Insiders, though, have tried to show they have every confidence in the company, buying significant tranches of stock with the CEO and one of its directors purchasing more than $1 million worth between them.
Although oil's rush above $100 a barrel may hurt some refiners like Western Refining (NYS: WNR) , which have been profiting off the spread between West Texas Intermediate and Brent crude, it should give something of a reprieve to ATP, which will get some wiggle room without the need for outside capital infusions.
Why do I feel guilty about this pick? It's a gift from the shorts. It's one of those deals where they have reserves out the wazoo and a big yet manageable debt.
Add the oil and gas company to your watchlist, and then head over to the ATP Oil & Gas CAPS page and drill down for additional insights on its prospects.
It appears analysts haven't caught up yet with the new reality of growth for Sequenom, now that its MaterniT21 Down syndrome test is on the market. Safer than amniocentesis and incredibly accurate (99.1% with few false positives), the test should provide the biotech with a very good alternative revenue stream to its genetic testing MassArray technology. Over the past nine months, sales were up 20% and margins improved thanks to the installed base of MassArray systems. The Down syndrome test just launched in October, and next quarter's results should show whether it has the ability to gain traction.
Of course, building a better mousetrap doesn't necessarily mean sales will really beat a path to your door. Like Exelixis (NAS: EXEL) , which failed to convince the FDA that its prostate-cancer therapy was worth taking a shortcut to approval, Sequenom needs to prove to a skeptical market that its tests can live up to the hype.
CAPS member acts20 thinks hospitals will be clamoring for the test, and I don't disagree. I've marked the stock on CAPS to outperform the broad market averages going forward, but you can tell us on the Sequenom CAPS page or in the comments section below whether you agree. Then follow along with its progress by adding it to your watchlist.
House of pain
It's been a long time coming -- three years, actually -- but Synovus Financial has returned to profitability through a tough program of closing underperforming bank branches, cutting jobs, and raising capital. With large reductions in non-performing assets that dropped 25% year over year and the decrease in net charge-offs, Synovus has been among the best-performing regional banks over the past month, rising more than 26% and beating out larger rivals such as Regions Financial (NYS: RF) , which is up 11%, and BB&T, which is up less than 1%. M&T Bank is down 2% in the same time period.
With even 85% of the CAPS All-Stars weighing in on Synovus' side, it seems Main Street is ahead of the curve and Wall Street. You can tell us on the Synovus Financial CAPS page or in the comments section below whether you believe it will continue climbing out of the hole it dug, 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 this article was published Fool contributorRich Dupreyholds no position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool owns shares of Exelixis and Western Refining.Motley Fool newsletter serviceshave recommended buying shares of Exelixis. 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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