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Saturday, December 18, 2010

5 Stock Christmas stockings stuffers for 2010 and 2011

•Aeropostale (NYSE: ARO)

•Conexant Systems (Nasdaq: CNXT)

•Health Management Associates (NYSE: HMA)

•Jamba (Nasdaq: JMBA)

•L-1 Identity Solutions

Some of these names might surprise you. For example, L-1 Identity Solutions showed French aerospace leader Safran enough potential that Safran decided it wanted to buy most of the company. Almost great? Even familiar names can still offer some of the best opportunities. Perhaps we've just forgotten the potential they still hold.

And smoothie maker Jamba is reinventing itself by expanding beyond just fruit drinks. It's blending new opportunities by offering warm drinks and food to take on Starbucks (Nasdaq: SBUX) and fruit-based energy drinks that will squarely challenge Hansen Natural. As the 170,000-plus CAPS members have chosen these companies as less obvious sources for tomorrow's great buys, let's see why they might merit your attention.

In the sight of greatness?

Given that it just stumbled, with same-store sales falling 1% for November following a 2% drop in October, it might be surprising to find retailer Aeropostale on this list. Even laggard Abercrombie & Fitch (NYSE: ANF) was able to report another month of strong comps.

Yet along with Buckle, Aeropostale has been one of the outstanding retail success stories throughout this recession. The market's overreaction to the sales news created a buying opportunity that even private equity investors noticed. The retailer has hired Barclays to advise it on preventing a hostile takeover attempt.

Assuming that management succeeds in fending off any potential bidders, CAPS member echeverria says the retailer remains best in class:

ROIC best in it's industry; great inventory control, clean balance sheet. Recent sell off is an over reaction! [Aeropostale] will outperform it's peers over the next five years.

More than 91% of the CAPS members rating the retailer expect it to outperform the broad market averages. Tell us on the Aeropostale CAPS page whether you believe that it can gain altitude again.

Dirt cheap?

Fabless semiconductor maker Conexant Systems has been diligently paring down its debt-laden balance sheet using equity offerings made earlier this year. Coupled with its sales of various product lines in order to concentrate on its core business, Conexant should be able to create value for shareholders again.

It hasn't been an easy path; the semi shop anticipates a significant sequential revenue decline in its legacy businesses for this quarter. Still, CAPS member TechSci has high hopes for Conexant's new graphics chip.

Not sure whether Conexant is right for your portfolio yet? Add the stock to your watchlist to get all our Foolish news and analysis on the company aggregated for you.

A big opportunity

Mergers and acquisitions is one of the themes running throughout a number of the companies listed today. It's possible that Community Health Systems' lowball bid for hospital operator Tenet Healthcare (NYSE: THC) in November will actually be an opening for Health Management Associates to buy Tenet. Analysts suspect that HMA is the only real alternative (aside from private equity) to make a realistic bid for Tenet. But although Wall Street has cast a pall over Community's offer, Community still might come back with a higher bid that Tenet shareholders would jump at.

Thus, investors comparing Health Management Associates to either Community or Tenet may find HMA the better choice. Rate or read about the hospital operator on the Health Management Associates CAPS page, and add the stock to the Fool's free portfolio tracker.

A great opportunity for you

Investor sentiment suggests these four-star investments still seem to be on their way to five-star greatness, but 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
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