The Best Stocks Right Now

It's been a rough-and-tumble two months for the market, to say the least. The subprime crisis has played havoc with the financial sector, with once-well-thought-of names like E*Trade Financial (Nasdaq: ETFC  ) , Washington Mutual (NYSE: WM  ) , and Fannie Mae (NYSE: FNM  ) all suffering painful falls.

Things may appear bleak, but as Mr. Cramer says, there's always a bull market somewhere. In unsure markets like this, however, they can be more difficult to find. That's where the 77,000 investors participating in Motley Fool CAPS can help. CAPS players rate stocks to either outperform or underperform the market over a specified time period. The CAPS players themselves are rated based on their performance.

Here's this month's list of the top-rated stocks on CAPS.

Company

Market Capitalization*

PowerShares Water Resources ETF

$2.1 billion**

AECOM Technology

$2.8 billion

iShares MSCI Singapore Index Fund ETF

$2.0 billion**

Rofin-Sinar Technologies

$1.4 billion

Metalico (NYSE:MEA)

$0.316 billion

America Movil

$109.0 billion

Silver Standard Resources

$2.1 billion

Pride International

$5.4 billion

Woodward Governor Co.

$2.3 billion

*Values as of Dec. 14.
**Net assets.
Data provided by Capital IQ, a division of Standard & Poor's, and Yahoo! Finance. 

Please bear in mind that these stocks are not formal recommendations. Instead, they're offered as jumping-off points for further research -- and, what's more, researching five-star CAPS stocks such as these has proven to be an effective tool for investors.

Water, water everywhere
Despite the fact that just more than two-thirds of the Earth's surface is covered in water, it could prove to be a precious commodity in the coming centuries as global demand for clean drinking water outpaces supply. As world populations continue to grow and emerging market economies improve, clean water infrastructure will need to be built to distribute the nectar of the gods to remote and populous cities alike.

The PowerShares Water Resources exchange-traded fund looks to capitalize on this phenomenon by investing in companies "that focus on the provision of potable water, the treatment of water, and the technology and services that are directly related to water consumption." As you might imagine from this vague objective, the ETF has some wiggle room in terms of what stocks it can select. Water utilities like Aqua America (NYSE: WTR  ) , materials companies like Nalco Holding (NYSE: NLC  ) , and even industrial conglomerates like General Electric (NYSE: GE  ) are included in this ETF. If it has anything to do with water, it's fair game.

CAPS investors are largely smitten with this water ETF -- 488 of 491 investors who have rated it believe it will outperform the S&P 500 going forward. Many believe water will be the next oil.

While this may turn out to be the case, investors should still ask if this particular investment vehicle is the best way to capitalize on the water market. One concern may be that 17 of the 35 stocks in the fund are small- or micro-cap companies. With such a large weighting toward tiny companies, an unexpected downturn at one of the small firms could take its toll on the ETF.

You can learn what other CAPS investors are saying about the PowerShares Water Resources ETF by clicking here. If you'd like to voice your opinion about this ETF, or any stock for that matter, join the Motley Fool CAPS community now and make your voice heard.

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