Saturday, October 20, 2012

The Stocks Wall Street Loves

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.

Stock

CAPS Rating (out of 5)

CAPS Bullish Sentiment

No. Wall Street Analysts

52-Week Price Change

EV Energy Partners (Nasdaq: EVEP  ) **** 96% 7 101%
Hi Tech Pharmacal (Nasdaq: HITK  ) ***** 94% 4 64%
Polymet Mining (NYSE: PLM  ) *** 94% 1 (39%)

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.

Everything old is new again
With drilling technologies becoming more efficient and productive, new areas of exploration continue to open up to exploration and production outfits like EV Energy Partners. Where once the Fayetteville or Marcellus remained in the public consciousness for an extended period of time, now we're hearing about the latest, greatest opportunities sooner and faster. Eagle Ford, Niobrara, and now the Utica shale are gaining prominence.

It's not so much that these are new names, per se, but with technology improving, more companies can pile into them in a hurry.

The Utica shale formation in eastern Ohio is quickly attracting a lot of attention, and looks like it will be the next big drilling hotspot. ExxonMobil is buying drilling rights in the region, while Magnum Hunter Resources (NYSE: MHR  ) has potentially rich assets there. So promising is it that it could be a boon for those looking to raise cash, like Chesapeake Energy (NYSE: CHK  ) . EV Energy Partners also has a deep portfolio here, controlling some 780,000 acres in the region, and it says it will be looking to sell some of its assets there.

The wildcard here, and most everywhere else these days, is the contentious fracking debate and whether it poses an environmental hazard. Although there's no evidence that it poses a risk to groundwater supplies, that hasn't stopped the critics from raising the issue and generating doubt.

The large land holdings EV has probably helps explain why 98% of the CAPS All-Stars rating the E&P believe it will outperform the broad market averages. Let us know in the comments section below or on the EV Energy Partners CAPS page whether you think this will be the next new thing. Follow along with its progress by adding the stock to your watchlist, too.

Feeding a fever
The FDA isn't about to let a 50-year history of effectiveness stand in its way of controlling the drug market. Because cold medicine Lodrane hadn't been put through the modern-day wringer of FDA approval, it became one of more than 500 cold medicines the regulatory agency yanked from pharmacy shelves despite no significant health or safety issues reported over their lifetime.

Lodrane was made by Hi-Tech Pharmacal, just one of the generic-drug companies affected by the order. It was marketed by its branded-label subsidiary ECR Pharmaceuticals, which represents approximately 11% of the company's total revenues, so the overall impact wasn't too crushing. Last quarter, total sales jumped 43%, driven in large part by its Flonase nasal spray, but even ECR's revenues were 6% higher as it added products from recent acquisitions. The loss of Lodrane shouldn't be a problem going forward.

Analysts like Hi-Tech better than some other generic-drug makers, such as Par Pharmaceuticals, and at just 8 times forward earnings, it's cheaper than some others such as Watson Pharmaceuticals, though Par and Mylan (NYSE: MYL  ) go for less.

CAPS member�luremaster likes that it's not only discounted right now, but has also been outperforming expectations. It's beaten analysts' earnings estimates for five straight quarters. Add the generic-drug maker to your watchlist to keep tabs on whether it will get the results it needs to seek out continued profit excellence.

Hold off on the champagne
Time is money, and regulatory agencies are notorious for wasting time and, thus, company money. Polymet Mining, which literally sits on a gold mine of opportunity at its NorthMet project in Hoyt Lakes, Minn., is suffering the consequences of government foot-dragging on its supplemental draft environmental impact statement (EIS), which is now expected to be completed in January. The NorthMet mine is one of the world's largest undeveloped deposits of copper, nickel, and other non-ferrous metals.

The copper deposits alone are worth the effort. Copper mines owned by�Freeport-McMoRan (NYSE: FCX  ) ,�BHP Billiton, and�Rio Tinto are all facing double-digit drops in production this year. But with much of the easy-access copper already mined, prices are likely going to rise higher, even though economic concerns currently weigh on it. The permitting delays could end up working to Polymet's benefit.

With commodities giant Glencore continuously raising its stake in Polymet (it can go as high as 24%), CAPS member Rascheez has an idea of what might happen down the road: "Polyment working in conjunction with Duluth Metals will be a cash juggernaut. Chances are of course that Glencore will acquire the mine (it already owns 20% [because of] all the financing tranches Polymet has needed to get through the EIS process)."

Mine the other opinions on the Polymet Mining CAPS page, and add its stock to the Fool's free portfolio tracker for complete coverage of its developments.

Agree to disagree
It pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page.

Sign up today for the completely free service, and tell us whether these stocks deserve to have Wall Street marching lockstep.

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