Even on the market's worst days, buyout news and other short-term forces can send individual stocks up by 10%, 25%, even 50%.
For example, when Centennial Communications announced it was being bought out by AT&T
But beyond less-predictable events like that one are stocks with fundamentally compelling reasons for recent momentum. The trick is to find those stocks. That's where Motley Fool CAPS comes in.
The story behind the story
CAPS is no crowd of lemmings. Its best-performing members' opinions do more to shape each company's rating than the picks of their poorer-performing peers. Let's use the collective wisdom of more than 120,000 CAPS members to filter out the noise and find companies that are offering strong momentum.
We'll use CAPS' handy stock screening tool to quickly zero in on companies with a stock price increase of at least 20% in the past four weeks, a market cap of greater than $100 million, and a beta of less than 3.
Here's a sample of stocks our CAPS screen returned:
|
Company |
CAPS Rating
|
4-Week |
|---|---|---|
|
Harvest Energy Trust |
***** |
35.7% |
|
Cogent |
***** |
25.5% |
|
Chemical & Mining Co. of Chile |
***** |
22.3% |
Source: Motley Fool CAPS. Price return from Oct. 24 through Nov. 19.
Trusting in oil
The global financial crisis has bled into the energy sector, forcing oil prices lower, and dragging shares in energy companies like Devon
Still, some believe investors may be letting great opportunities to get solid energy companies on the cheap slip through their fingers. With emerging market demand continuing, and future development (read: supply) being cut back, there's a strong case for oil prices climbing back up into the triple digits. In its most recent quarter, Harvest has maintained strong performance in both its upstream and downstream portions of its business, generating relatively stable cash flows during the market chaos.
Many CAPS members like the Canadian oil and natural gas producer's high dividend, currently yielding 28%, and see long-term potential to reap profits from vast natural resources contained in Canada. Taken all together, a solid majority -- 96% to be more precise -- of the 770 CAPS members rating Harvest Energy Trust expect it to outperform the market.
Fingerprinting money
In its third quarter, revenues at biometrics and fingerprint-identification system provider Cogent jumped 56% year over year to $35 million and net income nearly tripled to $12 million. Revenue has been surging due to orders from many of its customers like Morocco and the U.S. Department of Homeland Security, and the company expects to build its 2009 backlog with several significant contracts to be awarded in the next six months.
CAPS members are largely bullish on Cogent, which has been on the rise recently and has outperformed its sector. A recent upgrade by JPMorgan has also boosted shares as the bank's analyst sees strength in the company's government contracts. Even though some governments may be cutting spending, Cogent's products help save agencies money, making it likely that its products will continue to see strong demand.
And with the new Obama administration set to take office in the U.S., many investors view his promises of strengthening defense as a good sign for investors in firms like Cogent. As such, more than 96% of the 548 CAPS members rating Cogent expect it to beat the market.
And you?
What's your story? Whether you buy the tale of a stock that's soaring or souring, your own research is more important than collective opinions. But these collective opinions can make your due diligence a whole lot easier.
Add your take on these or any of the nearly 5,400 stocks that our 120,000-plus members have covered in Motley Fool CAPS. It's totally free to be a part of the community, and the payback is more than worth it.
