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)
No. of Analysts
Wall Street Bullish Sentiment
CAPS Bullish Sentiment
Canadian National Railway (NYS: CNI)
Patriot Coal (NYS: PCX)
ReneSola (NYS: SOL)
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.
Running down the track
Both Canadian National Railway and its primary rival north of the border, Canadian Pacific Railway, have extensive track networks that extend across Canada and into the U.S. and serve a variety of industries including the coal, freight, and auto industries. And though both stocks have had some big ups and downs this year, National's stock is up nearly 20% over the past year, while Pacific's is barely above where it started.
Pacific is looking for its deal with Teck Resources (NYS: TCK) to boost performance going forward. That could provide a halo effect for National, which saw its coal business suffer from a 9% drop in volumes, the one weak spot in its operations last quarter. In contrast, Union Pacific (NYS: UNP) saw a 7% increase in coal volume.
The broad rail network between two friendly trading partners is what has CAPS member papsrus preferring Canadian National.
Well-run rail company. Proven track record. Broad reach. Transports goods between two of the worlds biggest trading partners. Nice dividend. The kind of dependable stock that can provide solid ballast in a growth portfolio.
Add the railroad to your watchlist, then head over to the Canadian National Railway CAPS page and work all the live-long day to tell us if this is the right stock for our portfolios.
No canary in a coal mine
Those mixed signals from coal are also hurting coal miners like Patriot Coal and Arch Coal, both of which have seen their stocks cut in half this year as fears of a European recession and lower pricing weigh on performance.
But the real growth is going to come from emerging economies like China, where analysts estimate demand will grow over the next five years by a total of 600,000 tonnes per day. The International Energy Agency says prices will also rise during that time period. Patriot has been saddled with below-market-rate thermal coal contracts that are expiring, so it's looking to capture more of the export business going forward.
The uncertainty that currently surrounds coal is leading to discounted valuations, as CAPS member cafulu points out, but tell us on the Patriot Coal CAPS page or in the comments section below whether you agree. Then follow its progress by adding it to your watchlist.
Not a sunny day
Europe's financial difficulties are pressuring solar shops, too, since they're no longer able to pay for the substantial subsidies that have thus far propped up the industry. With inventory high across all segments of the solar sector, ReneSola, LDK Solar (NYS: LDK) , and most other names in the space are coming under intense financial pressure of their own. First Solar (NAS: FSLR) was just the latest player to reduce its guidance for the current year as well as for 2012. It's a bleak outlook that should have alarm bells ringing everywhere.
ReneSola's recent earnings report saw revenues nearly cut in half as pricing fell through the floor, turning a year-ago profit into a loss this time around. I don't find many weaknesses in the bear arguments against ReneSola or any of the other solar shops, and think the industry is in for a prolonged period of underperformance; it's yet another solar name I've marked down on CAPS.
However, eksummers620 suggests the company makes a good takeover target at this point.
I see these guys as a buyout candidate. They have technology that is worth something and the P/E ratio is so low. It's a risky bet but with some of the big names in the solar field being forced to reevaluate their business model, ReneSola could be a good story for a buyout.
Let us know on the ReneSola CAPS page or in the comments section below whether, like me, you think it's lights-out for solar, 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.Click hereto see his holdings and a short bio. The Motley Fool owns shares of First Solar.Motley Fool newsletter serviceshave recommended buying shares of Canadian National Railway and First Solar. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not 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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