Wall Street enthusiasm for the companies listed below is at best tepid, yet our Motley Fool CAPS members would disagree. They've bestowed on these companies top honors, signaling their belief that the shares will outperform the market.
So who has it right? The professional class of analysts sitting in their paneled offices and smoking stogies, or a Motley community of investors pooling their best thoughts for others to share? We think we know who will come out ahead. How about you?
CAPS Rating(out of 5)
Wall Street Bullish Sentiment
CAPS Bullish Sentiment
Banco Santander (NYS: STD)
Hercules Offshore (NAS: HERO)
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.
Rain in Spain
With the exit of Greece from the euro looking increasingly likely, the real next focus of attention is on Spain and Italy, both of which have equally serious financial problems, but which the European Central Bank has neither the financial nor political will to rescue. They aren't too big to fail; they're simply too big to save.
The nationalization of Bankia by the Spanish government last week is a clear signal the situation is unraveling. Sovereign defaults are in the future, and while Spain tried to sidestep going to the ECB for a loan by using the continent's bailout fund, Germany put its foot down and said no. It's already feeling the wrath of those who didn't like its secretly financing European bailouts.
Spanish banks are scrambling now, with Banco Santander saying yesterday it will set aside 2.7 billion euros to cover potential losses from developers not currently seen as default risks. Having already set aside money just a few months ago to backstop losses from developers who are high-risk, Santander said it will dispose of assets to meet the requirements its earnings can't finance. Banco Bilbao Vizcaya Argentaria (NYS: BBVA) anticipates a 1.8-billion-euro impact.
While CAPS member dneedle1 admits the situation in Spain could get uglier in a hurry, he's hoping against hope it doesn't -- and in that situation Banco Santander should be seen as undervalued. I'm not so hopeful as he, so I've rated the Spanish banking giant to underperform the markets. If the situation seems too risky for you, add Santander to your watchlist to watch the drama unfold, but tell us on the Banco Santander CAPS page or in the comments box below if you think this is the beginning of the end of the European Union.
A shallow grave?
Call it a stealth recovery in drilling, but while a lot of attention is being paid to ultra-deepwater drillers like Transocean (NYS: RIG) , there's some quiet improvement under way that bodes well for shallow-water drillers like Hercules Offshore. Last month's fleet status report offered some encouraging signs, even if it was a mixed bag overall.
While utilization rates are still below 50% and international dayrates dragged down the total figure, domestic dayrates in the Gulf of Mexico were inching higher, which is promising because Hercules is so dependent on the area. As the Fool's Travis Hoium notes, it wasn't enough to keep Hercules or Parker Drilling (NYS: PKD) from posting even more losses, but perhaps it's a signal that the shallow-water drilling industry has finally reached the murky bottom it's been sinking to these past two years.
Over on CAPS, more than 1,650 members have weighed in on the offshore driller, and 96% of them believe it will come back to beat the Street. Let us know on the Hercules Offshore CAPS page if you agree this is a good sign, or tell us in the comments section below if international markets will continue to sink the driller. Add Hercules Offshore to your watchlist to be notified when the Titanic is raised at last.
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 Transocean.Motley Fool newsletter serviceshave recommended buying shares of Hercules Offshore. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.
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