Eddy Elfenbein submits: As long-time readers know, periodically I’ll write about little-known stocks that have strong businesses, but are unheard of on Wall Street. I’ve never understood why everyone wants to own the next Google or Apple, instead of investing in proven, well-run businesses.

Last year, I mentioned three micro-cap financial stocks: NewMil Bancorp (NMIL), Northern Empire Bancshares (NREB) and Coastal Financial (CFCP). These are all great stocks, just no one knew about them.

Eddy Elfenbein submits: Last November I wrote about stocks flying below Wall Street's radar, meaning teeny micro-cap stocks that aren't followed by any Wall Street analysts. Investors are often surprised to learn that some of the best publicly traded companies are completely ignored by Wall Street.

In my original post, I mentioned three small banks. Today, the second one got bought out. Northern Empire Bancshares (NREB) is going to be acquired by Sterling Financial (STSA) for $335 million in cash and stock.

The average number of analysts per tech stock in the S&P 500 nearly doubled to 23.53 by the end of April from 12.36 in January 1996 and was still 22% higher than the 2000-2001 average of 19.25 analysts per tech stock, according to [Francois Trahan, chief investment strategist at Bear Stearns Cos.'] report. By the first quarter of 2000 -- near the height of the Internet bubble -- the total stock market value of S&P 500 tech stocks peaked at well over $4 trillion. Today it is about $2 trillion.

A close look at Bear Stearns's data and the tally of IPOs during the past decade shows the ranks of research analysts tend to cluster around industries that yield the greatest volume of IPOs and brokerage fees -- even if the performance of stocks in those industries is poor over time[...]

Eddy Elfenbein submits: I love finding great stocks that are under-followed by Wall Street. Now the International Herald Tribune brings evidence that the ignored stocks do better than their well-watched peers:

Data compiled by Bloomberg 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.

Eddy Elfenbein submits: There are a few small banks and savings & loans I like to watch. These are great stocks to follow. There are lots of wonderful companies out there that almost no one knows about. Four of my favorites are Northern Empire Bancshares (NREB), Harleysville National Corporation (HNBC), NewMil Bancorp Inc. (NMIL) and Coastal Financial Corp. (CFCP). The first two are banks, the latter two are thrifts. Best of all, not a single analyst on Wall Street covers any of them.

To give you an example, here are Northern Empires’ EPS figures for the last few years.