Great Call on Marvel! What's Next?

 

 

Ahead of Monday's big buyout announcement, Marvel Entertainment's (NYSE: MVL) stock had collected well more than 3,500 outperform ratings from The Motley Fool's CAPS community.

There's little doubt why the community was so excited about the company. It controls more than 5,000 superheroes and villains (including the likes of Spider-Man and the X-Men), it delivers a huge return on shareholder equity, and just a few years back it launched a production studio to make its own movies.

While the collective opinion of the CAPS community wasn't quite high enough to earn Marvel a perfect five-star rating, there have been a lot of CAPS members who have racked up significant points by betting on this comic powerhouse. One is TMFMuse, who scored 167 points by picking Marvel to outperform back in May 2006.

TMFMuse is one of CAPS' All-Stars -- players with a rating of 80 or greater -- and has managed a stock-picking accuracy of 49% while racking up more than 1,000 points. Marvel isn't his only great call. Here's a look at a few of his other prescient picks:

Company	Date Picked	Date Ended	Call	Points	CAPS Rating (out of 5)
Green Mountain Coffee Roasters (Nasdaq: GMCR)	9/7/06	Still Open	Outperform	641	*
Netflix (Nasdaq: NFLX)	8/25/06	Still Open	Outperform	157	**
Chipotle Mexican Grill (NYSE: CMG)	11/17/08	Still Open	Outperform	70	***

Data from CAPS.

So what is this investor looking at these days? Here are a few of the most recent calls on CAPS:

Company	Date Picked	Call	CAPS Rating (out of 5)
Blackboard (Nasdaq: BBBB)	8/20/09	Outperform	***
Costco (Nasdaq: COST)	5/13/09	Outperform	****
Toyota (NYSE: TM)	5/13/09	Outperform	***

Data from CAPS.

While not all of these picks may pan out, they could be a good place to start further research. I decided to take a closer look at Toyota.

Puttering through the recession
There's nothing particularly impressive about the state of Toyota right now. Recession has taken the edge off the world's appetite to buy cars and has whacked Toyota's financial results.

When the company reported its first fiscal quarter in late June, it showed a near-40% drop in revenue and its bottom line swung from a profit to a sizable loss. The reduction in demand has been bad enough that the company decided to cut its capacity by 10%.

But let's not write Toyota off quite so fast. First off, remember that the auto business is cyclical and lean times are par for the course. The key issue -- as the hapless General Motors and Chrysler highlighted -- is whether the company has the financial wherewithal to survive the lean times.

While Toyota's balance sheet is hardly "spick and span," it does have a $33 billion cash hoard, which will come in very handy if we don't quickly pull out of this recession. It's also notable that though the company has been reporting losses since December 2008, it has produced positive cash flow from operations in the past two quarters.

And while it's hard to expect that "Cash for Clunkers" sales will turn the tides for the auto industry, Toyota claimed the crown for the most cars sold under the program, grabbing nearly 20% of total program sales.

While more than 3,000 CAPS members have rated Toyota's stock an outperformer, there have been enough detractors to keep the stock idled at a middling three-star rating. CAPS member torufii, one of the many Toyota bulls, weighed in last month with a tongue-in-cheek take on the auto industry's future:

It is hard to imagine that cars will be obsolete. The general concept of a mobile system is hard to take away, unless we find a totally different paradigm of mobility. It is not impossible but I would say the odds are low.

To take torufii's stance once step further, as long as autos continue to be the primary form of transportation, there will be plenty of customers for Toyota to sell to.