The Motley Fool's Weekly Editors' Picks
Jun 23rd 2012 4:07PM
Updated Jun 23rd 2012 4:12PM
Fools were out and about this past week in an investing world jam-packed with actions and ideas. Here are three articles you might find useful as you decide how to invest your money.
5 Value Stocks With Profit-Producing Power
Fool analyst Dan Caplinger culled nine companies from the S&P 500 that he believes deserve a second look based on the stocks' valuations relative to earnings as well as the companies' returns on capital.
"What you need are stocks that are both fairly inexpensive and still have successful business models that can produce strong returns well into the future," Dan noted. He chose to look at return on capital because it "helps tell you how successful a company is in taking the money that's available to it and finding ways to use it productively on profitable business projects."
Dan likes engine maker Cummins' (NYS: CMI) innovation. "Cummins in particular seems promising as it goes beyond its traditional truck-engine business to develop innovative natural-gas-powered engines that could take advantage of the recent energy boom," he wrote.
Earlier in the week, Fool analyst Jeremy Bowman gave a rundown on why Cummins' stock looks like a buy, noting, among other things, a decrease in stock price, its long-running joint venture with Westport Innovations, and increasing sales in emerging markets including China and Brazil.
The growth potential in Intel's (NAS: INTC) move to mobile caught Dan's eye. Microsoft edged out Intel on the metrics, but Dan gives Intel more credit because it "has a more capital-intensive model in producing semiconductors than Microsoft's software-focused business."
Read Dan's article for a look at other value stocks with profit-producing power.
Innovative Ways Utilities Are Powering America's Future
As part of the Fool's Innovation in America series, Fool analyst Sean Williams took a look at renewable sources of electricity. Coal, nuclear power, and natural gas account for nearly 90% of electricity generation, but Sean looks for companies helping to break us out of our reliance on fossil fuels. He digs into hydroelectric, geothermal, biomass, wind, and solar thermal/photovoltaic.
"When I think of wind, I'm immediately drawn to Duke Energy (NYS: DUK) , which has invested $2.5 billion in the past five years to create wind farms capable of generating in excess of 1,000 MW of production," Sean wrote. Wind power is feasible almost anywhere and is a zero-emission energy source, he noted, adding, "If the noise generated by wind turbines can be lessened and output gradually improved with the introduction of better technology, wind power has a chance to outpace all renewable sources, in my opinion."
Read the article for more insight into innovation among utilities.
3 Growth Stocks Worth Another Look
Fool analyst Travis Hoium has two beverage stocks on his list of growth stocks worth another look: SodaStream (NAS: SODA) and Green Mountain Coffee Roasters (NAS: GMCR) .
Travis noted some strong numbers at SodaStream, including a 50% jump in revenue, and said the company has barely begun to tap its potential in the United States. "I think this stock has been left for dead and that investors would be wise to scoop it up before anyone figures out what a growth story this is," Travis wrote.
On the hot side of the coin, Green Mountain Coffee Roasters has seen its stock fall while revenue and profits have surged, Travis noted. "The stock trades at 8.5 times 2012 estimates, and profits are only expected to improve," he wrote. "I understand the worry about expiring patents and competition from Starbucks, but Green Mountain has built up a strong following that Starbucks won't eliminate overnight, and it has a record of growing revenue, despite the predictions of its demise."
Read the article for more on SodaStream and Green Mountain Coffee Roasters and to see what Travis had to say about Netflix.
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The article The Motley Fool's Weekly Editors' Picks originally appeared on Fool.com.Fool online editor Kris Eddy owns no shares of any stocks mentioned in this article. The Motley Fool owns shares of Westport Innovations, Netflix, SodaStream, Microsoft, Intel, and Starbucks. Motley Fool newsletter services have recommended buying shares of Green Mountain Coffee Roasters, Netflix, Microsoft, Starbucks, SodaStream, Westport Innovations, Intel, and Cummins, as well as creating a bull call spread position in Microsoft, creating a lurking gator position in Green Mountain Coffee Roasters, and writing covered calls on Starbucks. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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