Wall Street Loves These Stocks. Should You?
Despite all of Wall Street's conflict and contention, a fortunate few companies enjoy unanimous support among professional analysts. If the market's movers and shakers all believe these companies will beat the long-term averages, well, surely they will -- right?
Not so fast! With help from the 180,000 members of Motley Fool CAPS, we'll see whether these highflying favorites deserve analysts' unwavering support.
CAPS Rating (out of 5)
CAPS Bullish Sentiment
No. of Wall Street Analysts
52-Week Price Change
|8x8 (NAS: EGHT)||***||96%||2||68%|
|Kodiak Oil & Gas (NYS: KOG)||***||94%||10||47%|
Source: Motley Fool CAPS.
As you can see, there's a wide range of results so just because Wall Street loves ' em doesn't mean you have to. Use the list as a jumping-off place for your own research.
Making a connection
Some companies go after the biggest players in an industry believing their having the deepest pockets ensures continued spending through downturns. Others believe the broadest market -- consumer level, for example -- can offer protection. Enterprise-level VoIP provider 8x8 has eschewed both extremes, preferring instead to target small- and medium-sized businesses with its Internet phone call options, and is doing so profitably. Last quarter, it posted record revenues and profits, but also noted that customer churn sank to just 2%, its lowest level ever. It was able to crush estimates as a result.
Both Vonage (NYS: VG) and magicJack VocalTec are rivals who've targeted those broader segments, but with new cloud-based SaaS applications that diversify its product offerings, 8x8 now believes it can broadened its horizons by going after large clients as well.
The Fool's Anders Byland -- TMFZahrim on CAPS -- thinks the VoIP business is ready to roar regardless of who's dialing in:
I'm bullish on all four of the VoIP gurus, for somewhat different reasons. 8x8 is solidly profitable, and its business-class services are gaining traction beyond the itty-bitty biz segment. Cbeyond has the corporate focus down and is just waiting to turn the corner into profitability, making for an attractively priced stock. magicJack and Vonage cater to the consumer at different balances between price and convenience, and it's only a matter of time before a smartphone-infused America catches on to their advantages.
Tell us in the comments section below or on the 8x8 CAPS page if you think its focus on the business customer gives it a leg up on its rivals, then add the stock to your watchlist to see how it eventually plays out.
Although Encana or ConocoPhillips (NYS: COP) might head any investor's short list of companies to add as a core holding in your portfolio, smaller plays like Kodiak Oil & Gas or Hyperdynamics (NYS: HDY) maybe ought to make the cut, too. They carry a lot more risk, particularly if, like Hyperdynamics, they haven't produced anything just yet, but Kodiak should probably be seen as a top contender.
The exploration and production specialist has rich assets in the Bakken fields of North Dakota and Montana, and it has been on a bit of an acquisition spree, yet as the Fool's Dan Dzombak points out, it ought to make Kodiak a prime buyout candidate itself.
Although it recently suffered some production shortfalls, average daily sales in 2011 were still triple the output of 2010, making it a prodigious performer regardless. With higher proved reserves and an ambitious capital expenditure program, Kodiak attracts investors like Saveit2009, who views the oil and gas specialist a good, fundamental play:
Because it has a strong foundation, cash flow, good team, and a endlessly lucrative oil business, established company.
Add Kodiak to the Fool's free portfolio tracker to see whether it can get its production program turned around, and let us know in the comments section below or on the Kodiak Oil & Gas CAPS page who you think might be interested in making an offer for its operations.
Agree to disagree
Tell us whether these stocks deserve to have Wall Street marching lockstep, but then check out The Motley Fool's new free report that highlights a company breaking all the rules on its way to huge, multiple-bagger gains. The report is free, so get a copy today!
At the time this article was published Fool contributor Rich Duprey holds no position in any company mentioned. Click here to see his holdings and a short bio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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