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.
Here, we'll check out companies with only a handful of analyst coverage and 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 Street Picks
Estimated EPS Growth Next Year
|China Digital TV (NYS: STV)||****||5||8%|
|Nordic American Tankers (NYS: NAT)||****||4||NM|
Source: Yahoo! Finance; Motley Fool CAPS. NM = not meaningful; Nordic American is projected to have a narrower loss next year.
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.
Watching the tube
Technological changes can create massive opportunities for profit, but forced migrations to new standards typically leave little doubt as to who should be the winners and losers. When big-screen TVs suddenly became very affordable, glass-panel maker Corning (NYS: GLW) reaped the rewards. Coming as it did after Congress forced a conversion from analog to digital broadcast signals, Dolby Labs (NYS: DLB) also saw its digital sound technology become a required component of TV sets and set-top boxes.
China is now forcing a similar conversion to a digital signal by 2015, and investors might want to keep an eye on China Digital TV, which makes smart cards essential for the new standards. Indeed, it owns half the smart-card market in the country, so it will probably be a prime beneficiary.
Though it doesn't offer a regular dividend, it occasionally pays out special dividends. It was supposed to reward shareholders with just such a special payment at the end of December, but regulatory approval held it up and the dividend has been delayed.
I rated this stock on CAPS to outperform the market based on the catalysts coming. While they seem to be as slow in coming as its dividend payment, I'm confident China Digital will ultimately reap the rewards and am leaving my rating in place.
Let us know in the comments section below or on the China Digital TV CAPS page whether you think the market will eventually tune in to the potential, and then add it to your watchlist to be notified when the signal loses the static.
Pump up the volume
While Frontline (NYS: FRO) has become the symbol of the problems facing the tanker market, its operations almost capsizing under the weight of a fleet glut that's already taken out several lesser shippers, Nordic American Tankers isn't sailing so high on the rough seas, either. Its shares lost more than 80% of their value in 2011.
While there's some small comfort to be taken in its dividend, which currently yields more than 9%, Paragon Shipping had to suspend its dividend to survive. That suggests that given its recent losses, there's no assurance Nordic will be able to maintain its payment for much longer.
But CAPS member JackSparra thinks there's a good chance Nordic will be among the last shippers standing: "Bought this at 28 or so a year ago sold at 24 when i saw it was going south, maybe worth a try now at this level and with other tanker companies going bankrupt, just look at frontline."
Sail over to the Nordic American Tankers CAPS page to see what others are saying about the fleet operator, and add it to your watchlist to see whether it can catch a fair wind.
Swing for the fences
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At the time this article was published Fool contributorRich Dupreyowns shares of Dolby Laboratories, but he holds no other position in any company mentioned. Check out hisholdings and a short bio.Motley Fool newsletter serviceshave recommended buying shares of Dolby Laboratories, China Digital TV, and Corning. 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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