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Extra1/9/2008 12:01 AM ET

5 stocks with a collective edge

You don't have to be the best to win in the market, but you need to be consistently good. The CAPS ratings help investors identify stocks with above-average prospects. 

By The Motley Fool

A football bowl game may have only one winner, but investing offers many roads toward profits. We don't need to find the best stock year after year to secure our financial future -- we just need to find really good stocks, really consistently.

Now, the collective intelligence of our 80,000-plus MSN CAPS investors makes that task easier than ever.

For every highly rated stock on CAPS -- like five-star-rated Corning (GLW, news, msgs), which has been riding the wave of demand for flat-screen televisions -- there's an even better stock above it in the rankings.

Just look for the "Beat This Stock!" button in the top right corner of each stock's CAPS page. Click that button enough times and you'll climb the CAPS ladder toward the service's No. 1-ranked stock. Along the way, you'll gain a handful of stock ideas that might help you beat the market by an even wider margin than your favorite investment.

So who tops Corning, the maker of screens for laptops, desktops and TVs? Below are four stocks and an exchange-traded fund that ranked higher in the opinion of CAPS investors. CAPS is a dynamic service, so while these were the companies generated on a recent morning, the list may be different for you.

This is not a list to buy; instead, it should be a springboard for your own due diligence. Still, let's examine some of the reasons that CAPS investors think one of these companies' returns will beat Corning and the market alike.

Ahead of the pack
InvestmentIndustry12-month returnCAPS rating

Corning

Fiber optics, flat-panel displays

16.4%

*****

TGC Industries

Seismic surveys

33.7%

*****

Atheros Communications

Semiconductors

21.0%

*****

Wabtec

Railroad equipment and services

11.0%

*****

Gen-Probe

Diagnostic testing

17.0%

*****

iShares MSCI EAFE Index Fund

Big-cap foreign stocks

9.0%

*****

Viruses usually are detected through the body's production of antibodies, which is a lengthy process. When Edward Jenner produced the first smallpox vaccine in 1796, he started a whole new field of medicine -- and commerce. Today, thanks to mass immunization, smallpox is no longer a danger. But doctors must still wait for the body to produce antibodies before virus detection or treatment can begin.

Viruses persist today, HIV among them, and improvements in detection are always being sought. One recently developed method -- called nucleic acid amplification testing, or NAT assays -- allows for improving the safety of the blood supply at hospitals. As its name suggests, it amplifies and detects the genetic makeup of a virus without having to wait for the body to produce antibodies.

Gen-Probe (GPRO, news, msgs) is primarily a manufacturer of diagnostic tests for sexually transmitted diseases, including HIV, using NAT assays. It derived 96% of its revenue from these products last quarter, while receiving nominal revenue from Novartis (NVS, news, msgs) and others for collaborative R&D activities.

Gen-Probe's revenue and earnings per share rose by 10% in the third quarter, handily beating analyst forecasts.

Top-rated All-Star "longshort87" sees the company's ability to commercialize its intellectual portfolio as a sign it will be successful in the long run. The All-Star recently made the following pitch for the stock: "Impressive portfolio of intellectual property related to nucleic-acid testing and a solid operating record of transferring that IP into commercially successful products with recurring revenue streams. Rich pipeline of future products, $6/share of cash, zero debt, mid-high-teens organic revenue growth. Also potentially an attractive takeover target for a larger diagnostics firm (Roche? Abbott?)."

Is CAPS correct? These companies rated higher than Corning, but will they top its performance? Head to CAPS to share your opinion on your favorite stock to beat.

This article was reported and written by Rich Duprey for The Motley Fool. At the time of publication, he owned none of the stocks mentioned.

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