Analysts are ignoring Foster Wheeler Ltd., an engineering company, and W.R. Grace & Co., a chemical maker. Investors might want to pay attention.
Shares of those companies, and 26 other “orphans” covered by no more than one analyst from a major securities firm, outperformed the Standard & Poor’s 500 Index in the past year.
USG Corp., a construction- materials maker, investment- research firm Morningstar Inc. and fuel company Pacific Ethanol Inc. are on a Bloomberg list of stocks with a market value of at least $1 billion and sparse analyst coverage. A study by Bear, Stearns & Co. chief investment strategist Francois Trahan implies that such unloved stocks may keep beating the market – and attract more analyst attention.
Data compiled by Bloom berg showed 49 companies with market values of $1 billion or more that are covered by no more than one analyst. The median gain for the group over the past year was 17 percent, compared with an 11 percent rise in the S&P 500.
