Ugly Ducklings Get Their Moment in the Sun

This column was originally published on RealMoney on May 2 at 11:21 a.m. EDT. It's being republished as a bonus for TheStreet.com readers.

Analysts focus too much attention on hot stocks while ignoring all the ugly ducklings, no matter how well they're outperforming the market.

After all, it's more fun to weigh in on the popular plays-of-the-day than to spend time uncovering real moneymakers.

There's a whole world of quiet stocks out there that don't get the financial press they deserve.

And the profits in these lesser-traveled market corners can far exceed those of the big names being peddled by Wall Street's sell-side community.

So today let's identify a few of these forgotten stocks and see why they deserve a prominent place on your market radar.

Libbey(LBY Quote) sells tableware products in the U.S., Canada and the Netherlands. The stock was down in the dumps for years, hitting an all-time low at $6.85 in March. It then rocketed higher on heavy volume in a move that could persist for months. The stock is now overbought, so wait for a pullback to $10 or $11 before considering a purchase.

Herbalife(HLF Quote) markets weight-loss and nutritional-supplement products. The stock hit an all-time high at $35.55 in February, pulled back for two months and rallied through the high on strong volume last week. It's now dropping back to test new support levels. This selloff should offer a low-risk opportunity to get on board this developing uptrend.

Cooper Industries(CBE Quote) manufactures and sells electrical products. The stock has been moving higher in a persistent uptrend for the last eight months. It pulled back from its latest high at $96 two weeks ago and bounced strongly on Monday. Look for another pullback that fills yesterday's gap at $91. That would mark a buy signal for a rally up and through the April high.

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Lennox(LII Quote) manufactures air conditioning and ventilation units. It hit an all-time high at $34.56 almost two weeks ago, in a sharp move off a deep pullback. It's now sitting in an unstable position and could drop to the 50-day moving average at $31.32, before challenging the breakout high. That selloff should set the stage for a continued rally to the upper $30s.

You have to go back a long way to see how important the current price action is in Clorox(CLX Quote). The stock hit its historic high of $66.47 in early 1999. That price level is coming into play for the third time now, after the stock rallied off a deep low in early April. Another two points and it will complete a very bullish multiyear cup-and-handle breakout pattern.

TAL International Group(TAL Quote) leases and sells intermodal containers. The company came public last October at $18 and has been moving higher in a steady uptrend since that time. It hit a new high at $26.80 in mid-April, pulled back and bounced strongly last Friday. This reversal should mark the end of the correction and start of a rally leg that could reach $30 in the weeks ahead.

Finally, a short-sale setup to close out today's watch list. Spectrum Brands (SPC Quote), the new identity of the old Rayovac Corporation, makes batteries, lawn products and a thousand other consumer items. The stock broke five-month support on heavy volume in early April and is now bouncing back into new resistance. A rollover that violates the old low at $16 will trigger a sell signal for a decline that could reach $10.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider Libbey to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

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