3 Stocks Bucking the Downtrend

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, shares in Sirius XM rose 53% after Liberty Media agreed to lend $530 million to the company, saving it from bankruptcy.

But beyond less-predictable events like that 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 125,000 CAPS members to filter out the noise and find companies 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 25% in the past four weeks, a market cap of greater than $100 million, and a beta of less than 3. Below is a sample of stocks that our screen returned. If you'd like, run this screen yourself -- just keep in mind that results may change as the market does.

Source: Motley Fool CAPS. Price return from Jan. 23 through Feb. 20.

NovaGold
Many investors had written off Canadian gold miner NovaGold late last year, as the company faced a cash crunch and the possibility of being delisted from the Toronto Stock Exchange. But the completion of a $60 million private placement will help it pay off debt and keep its listing status, thus rejuvenating confidence in the gold miner.

NovaGold owns a 50% stake in one of the world’s largest gold deposits -- the Donlin Creek project in Alaska -- with Barrick Gold. It also plans to start exploration and development again at its Galore Creek mine -- a project that is owned 50/50 with Teck Cominco (NYSE:TCK) -- after work was halted in 2007. Some CAPS members still consider NovaGold a cheap stock packed with potential, admiring the defensive edge that gold provides in the volatile economy. Even with significant execution risk still hanging over the company, 92% of the 588 CAPS members rating NovaGold expect it to outperform the market.

Visa & MasterCard
Although the retail environment has been anything but cheery lately, Visa reported a 35% increase in earnings to $574 million, with its top line growing by 17% in its latest quarter. Debit transactions increased 18% and credit rose 10%, defying the crumbling economy. While competitors like American Express (NYSE:AXP) and Discover Financial Services (NYSE:DFS) face increasing pressure, Visa predicts 20% earnings growth through 2010.                     

MasterCard couldn't muster up anything close to Visa's performance in its fourth quarter, as earnings dropped 19% and U.S. market volume fell 5.2%. Even though analysts have a rosy view of MasterCard’s earnings growth into the future, some investors feel exceptional growth expectations are already priced into both stocks, with the uncertainty of the economy still looming.

Granted, Visa and MasterCard don’t have the risk of lending money to consumers the way American Express or Capital One (NYSE:COF) do; the two companies simply collect a fee on each card transaction. But as credit card delinquencies rise, leading to increasing charge-offs at firms like American Express, lenders are looking hard at internal data that can help them reign in risky consumers. In the case of Visa and MasterCard, it's more a matter of efficiency; both companies are sizing up the market, with plans to cut costs to help sustain earnings growth.

CAPS members generally favor Visa at this point, with 94% of the 4,229 members rating Visa expecting it to beat the market. MasterCard isn't far behind, though, with 90% of the 2,929 CAPS members who rate it believing it will be a winning investment.

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 125,000-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.