Even on the market's worst days, headlines and ticker feeds tout soaring stocks. Some juicy rumor or biotech wonder drug seems to be reason enough for a stock to climb 10%, 25%, even 50% -- sometimes in a single day. Sometimes, the companies are familiar, but many are names and stories entirely unknown to investors.
Often, news of a buyout offer that investors didn't anticipate sends a stock rocketing. In an effort to bulk up against the No. 1 and No. 2 computer vendors Hewlett-Packard
Luckily, there's help right at your fingertips. Motley Fool CAPS is a great tool not only for finding and screening stocks, but also for getting a quick read on the fundamental stories behind them. In addition, investors can quickly see just who -- from the big names on Wall Street that we track to the regular Joes on Main Street -- is bullish or bearish on the company, and why.
The story behind the story
Let's dig right in, using the collective wisdom of more than 60,000 CAPS investors, to look past the splashy news and find companies showing strong recent momentum.
We'll screen for stocks showing at least 30% price appreciation in the past month. Then we'll weed out stocks with less than a $100 million market capitalization and those with a beta greater than 3. This will help keep us out of the wild, pump-and-dump land of penny stocks. Here, then, is a broad sampling of stocks that our screen returned today.
|
Company |
CAPS Rating (out of 5): |
Price Change Last Month: |
|---|---|---|
|
Aluminum Corp. of China |
***** |
34.8% |
|
PeopleSupport |
***** |
32.1% |
|
Flotek |
**** |
36.3% |
|
Blue Coat Systems |
*** |
68.4% |
|
SIGA Technologies |
* |
37.8% |
Now let's sift further through this list of stocks that have thumped the market over the past month and find out why they've performed so well.
The method behind the madness
CAPS contains a searchable record of investors' opinions and comments about a company's fundamentals, value, and prospects at any given time. Users can see what other investors were saying about a company before a huge surge in price, and whether those investors still favor it after the run-up. A company's star ranking also has a history, showing whether that company has been rising or falling in the investing community's favor.
Lest you think that keying off CAPS ranks is equivalent to following a crowd of lemmings, note that the CAPS system weighs the opinions of the best-performing investors more heavily than those who haven't done so well. Thus, a company's ranking is influenced more strongly by investors who have already proved themselves better than the average dart-throwing monkey.
Metal madness
After making the momentum list barely two months ago, Chalco (or Aluminum Corporation of China) has burned up the tape again and vaulted nearly 35% in the past month. Back then, CAPS investors gave it a strong, five-star endorsement when the company announced it would acquire Peru Copper to help keep up with demand for metals. This month, Chalco's shares have surged following a first-half earnings report that wowed investors despite a 5% drop in net profit. But more investors have been coming out with bearish views on the company now for one main reason: valuation. While the majority of new opinions on Chalco continue to be positive, at least a few of the 39 bears have concerns that the stock is not cheap enough to warrant investment anymore.
Blazing coattails
Another repeat offender in the momentum category is network security firm Blue Coat Systems. The company has been on a tear over the past year, screaming higher by nearly 400% thanks to accelerating revenue growth now exceeding 40% on an annual basis. In its most recent earnings report, the company cited increased demand for wide area network (WAN) optimization technology, which is geek-speak for hardware and software that makes business computer applications run smoother across multiple locations around the world. With little surprise, though, the balance of CAPS investors voting bearishly on the stock cite valuation concerns going forward. With a forward P/E of 31.1, the stock certainly appears a little frothy at this point, with high expectations already built in.
Sniffling
SIGA Technologies is a top monthly performer, yet the company elicits little love from many investors in the CAPS community. The antibiotic and vaccine developer ranks with only a single star because nearly 40% of investors rating the company vote for it to underperform the S&P going forward. Now there are always risks investing in a biotech company in the developing stages, but investors see the $130 million company as a particularly speculative play with a stock that has been extremely volatile. With only minimal revenue coming in from grants and contracts, the company has been burning cash (nearly $60 million since 1995) to keep several trials moving ahead. Still in the phase 1 trials of its smallpox vaccine, the company may also need more grants and investor money in the future to keep operations alive.
What's your story?
Ultimately, the only story that counts is your own. Whether you buy the story of a soaring or souring stock, your own research is more important than collective opinions. But thankfully, these collective opinions make an individual's job of due diligence much easier.
So step right up and chime in with your own take on these or any of the more than 4,900 stocks that investors have covered in Motley Fool CAPS. It's totally free to be a part of this story, and the payback is more than worth it.
The average pick in the Motley Fool Stock Advisor newsletter service is up 64% vs. the S&P gain of only 27.6%. To see what market-beating stocks David and Tom Gardner are picking today, take a free 30-day trial.
Fool contributor Dave Mock has his own story, but he won't bore you with the details. He owns no shares of the companies mentioned here. Dave is the author of The Qualcomm Equation. Dell is a Stock Advisor andInside Value recommendation. PeopleSupport is a Pay Dirt recommendation. The Fool's disclosure policy has the momentum of a freight train but can stop on a dime.
