Wall Street's Best Hidden Stocks
Mar 1st 2012 4:04PM
Updated Mar 2nd 2012 12:07PM
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.
Below, 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
Wall Street Bullish Sentiment
Est. EPS Growth Next Year
|Rubicon Minerals (ASE: RBY)||****||1||0%||0%|
|Silver Standard Resources (NAS: SSRI)||****||3||67%||(27%)|
Source: Motley Fool CAPS.
Remember, without much analyst support, you'll have to do more scouting on your own to see whether these stocks deserve a spot on your portfolio's roster. Don't buy or sell them based solely on their appearance here.
Wiping away the tarnish
According to last year's updated resource estimates for its F2 gold-mining project in the prolific Red District region of Ontario, Rubicon Minerals' F2 Gold System -- part of its important Phoenix Gold project -- will yield a net present value of $433 million, even assuming gold priced at $1,100, which will pay back costs in just 3.3 years from the start of production. The report estimated the F2 System will produce 180,000 ounces of gold per year.
Now, gold miners will tell you that's not too shabby, but Rubicon's stock trades 38% below its 52-week high because the initial resource report indicated an inferred resource of 4 million ounces and suggested it held the potential for between 13 million and 16 million ounces of gold. Since it turns out that it's still a very good project -- good enough that mid-tier producer Agnico-Eagle Mines (NYS: AEM) acquired a stake in Rubicon last summer -- it just wasn't as exuberantly exciting as first thought.
Yet with financing now in place, Rubicon should be in production by the end of next year. That has CAPS member gamblingkev believing it is now the best-in-class miner.
This could be the best junior miner in Canada now with a terrific mine that should soon become a major gold producer in the Red Lake district with its Phoenix project and a number of other projects in the works. They have plenty of funding and could even be bought out by one of the big producers for a tidy sum. Either way, in a few years a lot of people are going to regret not picking up RBY in the 3-4 dollar range.
Add Rubicon to the Fool's free, personalized stock-tracking service and see how long it stays off the grid of the analyst community.
The silver lining shines
Silver miner Silver Standard Resources lost its luster after reporting a host of problems with equipment last year, and new resource estimates mean it will produce less from its Pirquitas mine in Argentina -- but at higher costs. It became precious-metals guru Christopher Barker's only top silver stock to have a lower per-ounce reserve valuation.
Silver Standard suffered production shutdowns in July and September due to faulty equipment, but after updating guidance toward the end of September, it suffered further shutdowns in October and November. Yet Motley Fool blogger Arthur Pinkasovitch believes the pure-play silver miner has gained more experience at the mine now, which should benefit it going forward.
Although the company only produces around 8.2 million ounces per year, it has more reserves than many of its larger competitors. In its third fiscal quarter Silver Standard Resources disappointed investors when it announced that total cash mining costs including royalties and taxes amount to $20.00. However, with increased industry experience in the Pirquitas mine, Silver Standard should see its operations become more efficient in subsequent quarters.
With 96% of the 231 CAPS All-Stars rating Silver Standard to outperform the broad market indexes, it's clear they think it will become a standard of excellence. Let us know on the Silver Standard Resources CAPS page whether it is over the delays it has experienced and add it to your watchlist to be alerted to any new developments that arise.
Swing for the fences
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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. 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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