Wall Street Needs to Get Behind These Stocks
Jan 17th 2012 5:54PM
Updated Jan 17th 2012 5:56PM
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
|3D Systems (NYS: DDD)||****||6||67%||91%|
|Mechel (NYS: MTL)||****||8||63%||97%|
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.
At around $1,300 each, 3D Systems new line of printers isn't exactly cheap, but when you consider they print in 3D, it is an amazing discount to the professional line that can cost almost $1 million. It has the potential to revolutionize the printing market and drive prices down lower.
While rival Stratasys (NAS: SSYS) largely pursues the commercial-only angle -- it does sell printers to Hewlett-Packard (NYS: HPQ) , which in turn makes a consumer version, but one that goes for $17,000 -- it risks ceding huge amounts of market share to 3D should the idea catch on. As the Fool's Alex Planes clearly illustrates, Hewlett's stock really didn't take off until its DeskJet line of printers broke the $1,000 price barrier. 3D Systems may yet have a similar trajectory.
Shares of 3D Systems are down by more than a third from their 52-week high but trade almost 20% higher since the start of the year. Despite the fact that I just rated it to outperform the broad indexes, I agree with CAPS member MBUK that 3D is only just getting ready to take off.
Reasonable P/E ratio, steadily improving EPS and most importantly of all a steadily growing stock of technology in a growth industry which has the potential to accelerate.
Add the printer maker to your watchlist then head over to the 3-D Systems CAPS page and tell us why you think its performance will stand in stark relief to its rivals.
Is China burning?
Russian coal miner Mechel has seen its stock wither as concerns over global economic slowdowns have only worsened as it's become apparent the Chinese economy could be heading for a deep freeze, too. Mechel's coal is used primarily by steelmakers, and with world finances in turmoil, sovereign nations will lack the wherewithal to finance new growth.
Last quarter the coal producer saw overall revenues fall by 7.6%, but by increasing production volumes (albeit at lower prices), adjusted EBITDA was able to jump 31% in the steel segment.
Steelmaker ArcelorMittal (NYS: MT) faces the same subset of worries that pulls at Mechel. While it does about a quarter of its business here in the U.S., it is mostly reliant upon a robust European economy, something that has been severely lacking of late. The serial credit ratings downgrade they've suffered through recently casts an ever-widening net of risk.
While a company's stock can theoretically always go to zero, CAPS member baselineace says if Mechel falls much further they'll essentially be giving it away. At just six times earnings, the coal miner trades for just a third of its sales and less than its book value. It certainly seems too cheap to ignore and I've rated it to outperform on CAPS
Add Mechel to your Watchlist and see if it can steel itself for a bumpy ride higher if global economies don't improve.
What's wrong with that?
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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. The Motley Fool owns shares of 3D Systems and Arcelor Mittal. Motley Fool newsletter services have recommended buying shares of Stratasys. 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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