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 Human Genome Sciences rose a stunning 277% in a single day last week after it announced positive results for its experimental lupus drug Benlysta.
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 135,000 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.
|
Company
|
CAPS Rating
(Out of 5)
|
4-Week
Price Change
|
|
Walter Energy (NYSE: WLT )
|
****
|
29.2%
|
|
Dow Chemical (NYSE: DOW )
|
****
|
25.8%
|
|
Medarex (Nasdaq: MEDX )
|
***
|
90.9%
|
|
Fuqi International (Nasdaq: FUQI )
|
***
|
30.3%
|
|
Harley-Davidson (NYSE: HOG )
|
**
|
30.4%
|
Source: Motley Fool CAPS. Price return from June 26 through July 24.
Super seeds to the rescue
While industrial chemicals may have been the staple products of Dow Chemical in the past, these days the company is finding more fertile ground in the business of developing improved seeds and farming chemicals. The company and partner Monsanto (NYSE: MON ) recently received regulatory approval in the U.S. and Canada for their genetically modified seed SmartStax. Set to be offered to farmers on three million to four million acres next year to grow super-corn, it's expected to be the largest ever launch of a corn biotech seed. One Monsanto executive said its use could grow to 50 million to 65 million acres in the U.S. alone within the next five to six years, providing a challenge to competitor DuPont (NYSE: DD ) , which recently stated that the launch of its new corn seed technology would be delayed while it waits for regulatory approvals from several Asian countries.
Shares in Dow Chemical also got a boost after Goldman Sachs upgraded the stock recently. The analyst firm sees increased earnings potential from its specialty chemicals business that was beefed up with its Rohm & Haas acquisition last year. The continued integration of the acquisition and the paydown of Dow's large debt load also have CAPS members bullish on the future outlook as they too see the possibility of margin growth on newer lines of products. Overall, 94% of the 2,174 CAPS members rating Dow Chemical expect it to outperform the market.
It's a bling thing
Chinese jewelry producer Fuqi has seen its shares skyrocket in the last several months as Chinese consumers continue to show a strong appetite for jewelry, even amidst a deteriorating global economy. Even though first-quarter revenue growth declined compared to the five straight quarters of triple-digit revenue growth reported previously, 41% year-over-year growth on the top line isn't shabby, and the company anticipates healthy second-quarter earnings, too.
The company has traditionally been a wholesaler but is moving further into retail to capture higher margins. It expects to open 30 or more stores this year, adding to its count of seven stand-alone stores and 62 retail counters. While some CAPS members think shares are no longer cheap, others still see monster growth possibilities as Chinese demand for precious jewelry continues to grow. At this point, 93% of the 284 CAPS members rating Fuqi remain bullish.
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 5,300 stocks that our 135,000-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.
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