5 Stocks Springing Back

With all the volatility in the markets today, there's no shortage of market seers attempting to call a bottom. Ben Bernanke called a bottom not once, but twice. Heck, even Keanu Reeves laid out what a world-ending market bottom looks like.

Investors should consider buying stocks after a big decline, when pessimism has unduly beaten good companies down to great prices. That's why we here at the Fool -- and 140,000-plus investors like us -- look to the Motley Fool CAPS community to help sniff out the real opportunities from languishing companies driven by speculation.

A real bottom or another leg down?
Of course, there's no foolproof method for timing a market bottom. But CAPS has a great balance of both quantitative and qualitative resources available on 5,300 stocks, and even a nifty stock screening tool to help investors quickly zero in on potential investment opportunities. Once we've rounded up our candidates, we can use all the information in CAPS to test whether each company has already hit bottom or simply primed shareholders for further pain.

I've used the CAPS screener to filter out $100 million-plus companies whose stock prices have appreciated by at least 20% in the past 13 weeks even while they remain at least 35% below their 52-week high. These stocks also have both a positive return on equity and earnings per share over the past 12 months; these criteria limit the results to companies that have a history of delivering results regardless of stock gyrations. 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 July 17 through Oct. 12.

The bottom case
Many investors see one big reason Sinovac may be looking nowhere but up today -- and it's called swine flu. While multinational companies like Novartis (NYSE:NVS), sanofi-aventis (NYSE:SNY), and GlaxoSmithKline (NYSE:GSK) have been racing to develop a vaccine for the swine flu, which was declared a pandemic in June, China-based Sinovac is one of several producers approved in China. Its other vaccines, including its hepatitis A vaccine Healive, have helped Sinovac generate stronger revenue and profits lately, but much of what has investors attention these days is the battle to ward off H1N1 in the world's most populous nation. As the country aggressively stockpiles the vaccine to contain the spread of the virus, the Chinese government recently placed a second order for 3 million more doses of the vaccine, and it could be back for more because it plans to vaccinate 5% of its population, or about 65 million people, by the end of the year.

Or a dead cat in disguise?
But even though Sinovac is well positioned to make tidy profits from this version of the flu, its treatment for the H1N1 strain may not sustain performance for very long. The company expects to generate significant revenues from the vaccine, but it's expected to be only a short-term boost lasting through the end of the flu season in 2010. And like other swine flu-related stocks such as Novavax (NASDAQ:NVAX) and BioCryst Pharmaceuticals (NASDAQ:BCRX), Sinovac's shares have already clocked huge gains so far this year. The stock has soared to more than eight times in value since its dip onto the dollar menu late last year. Some investors and analysts share concerns that if the virus is contained, shares in stocks such as Sinovac could pose a risk to investors as governments stop calling for more orders and valuations come back to earth.

What's your call?
Nearly 94% of the 357 CAPS members rating Sinovac Biotech remain bullish on the stock and see it outperforming the broader market. But I don't like to invest in companies whose value is highly dependent on one product, and a very sensationalized one at that.

But what ultimately counts is your own opinion; CAPS is just there to help you form it. The best part is that the Motley Fool CAPS database is all free, and you can even add your own insight on any of the 5,300 stocks that our 140,000-plus members have covered, whether it's related to expired felines or not.