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
Banco Santander (NYS: STD)
Elan (NYS: ELN)
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 close diligence on your part, so use these ratings as a launching pad for your own research.
Swim with the fishes
With Standard & Poor's becoming the latest ratings agency to downgrade Portugal to non-investment status and putting it in the same rotten barrel as Greece, the fear is that if either or both default -- which is eminently possible -- it will be like a contagion that ravages other European sovereignties. Spain and Italy might be particularly susceptible to catching that flu. And Spanish banking giant Banco Santander has been selling assets in Latin America -- a region that has offered a good return on investment thus far -- could find itself hemmed in.
Financial stocks were globally hammered by the mass downgrades (S&P saw fit to drop nine European countries from France, Italy, and Spain to Malta, Slovakia, and Slovenia; however Germany managed to escape unscathed). After MF Global shocked everyone by going bankrupt, banks continue to reduce their exposure to Europe. Bank of America (NYS: BAC) reduced its risk profile by about $245 million at the end of last year, though it was still on the hook for more than $14 billion.
Santander has plugged its holes that were revealed by the Basel II stress tests, and even though it seems incongruous for it to sell off assets that have done well, the bank is raising capital that will provide it a cushion. Highly rated CAPS All-Star starbucks4ever agrees, believing the loan infusions the central bankers have engendered reduce the risk all around.
S&P has dropped the axe so tactically, it's time to sell the news, that is, go long. Strategically, there is no longer any risk of financial crisis because the ECB has turned on the printing press, redistributing the savings of consumers to bankrupt bankers. Just as it was time to buy WFC at $8 in 2009, you don't want to miss the train now.
Add the banker to your Watchlist then head over to the Banco Santander CAPS page and tell us why you think it will (or won't) make it through the latest sovereign debt crisis.
Keep it moving
It's quickly become apparent to all involved that biopharmaceutical Elan is poised for greatness. Its multiple sclerosis therapy Tysbari has surmounted every obstacle thrown in front of it and along with partner Biogen Idec, Elan will soon be reaping the rewards of what will likely be a multi-billion dollar blockbuster.
It's true, there could be greater competitive pressure from Novartis' (NYS: NVS) Gilenya, which recently reported that when compared to Tysbari and Biogen's Avonex at comparable points in time, is actually exceeding the sales of either. Novartis recorded sales of $494 million with revenues from outside of the U.S., nearly doubling to $64 million in the fourth quarter.
Which is why the expanded labeling won from the FDA and the expanded use and labeling in Europe bode well for it being able to go head-to-head with Gilenya or any other drug coming to market. The success could also inspire Johnson & Johnson (NYS: JNJ) , which already owns 18% of Elan, to consider bringing it wholly into the fold. With a partnership centered around Alzheimer's drug bapineuzumab, it could be a marriage that won't founder on the rocks.
I recently joined the bulls on CAPS in rating Elan to outperform the market, based on the advances it has made in making Tysbari even more essential, but mindful of the risks of what is essentially at this point a one-trick pony. Add Elan to your Watchlist and see if it can make an even greater name for itself either alone or as part of a bigger pharmaceutical looking to replenish a dwindling pipeline of its own.
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 Johnson & Johnson and Bank of America.Motley Fool newsletter serviceshave recommended buying shares of Elan, Johnson & Johnson, and Novartis; and creating a diagonal call position in Johnson & Johnson. 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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