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5 Stocks Bucking the Downtrend

Recs

1

Disney Buys Marvel!

David Gardner called it. He’s up 1,334%! See what David’s recommending that you buy NEXT.

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 of Akamai Technologies (Nasdaq: AKAM) rose 13% on news of declining third-quarter profit that still beat Wall Street's expectations.

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 140,000 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^

Bucyrus (Nasdaq: BUCY)

****

35.7%

Headwaters

****

26.4%

NutriSystem (Nasdaq: NTRI)

***

47.4%

Liz Claiborne (NYSE: LIZ)

**

29.0%

US Energy

*

44.1%

Source: Motley Fool CAPS.
^Oct. 2 through Oct. 30.

Bucyrus
The rebound in commodities prices has led to increased investor optimism in recent months for mining equipment makers like Bucyrus and Joy Global (Nasdaq: JOYG). Bucyrus' shares enjoyed an additional boost after releasing third-quarter results, where the company reported a 43.5% increase in earnings and a small 5% jump in revenue over last year, which managed to beat analysts' expectations.

Much like in other industries, Bucyrus' customers are delaying new purchases, opting to maintain existing equipment with after-market parts. The company saw its backlog take a hit similar to Terex (NYSE: TEX), but has seen an increase in activity, leading it to raise its 2009 revenue outlook. It expects the increase in activity will help with the demand for original-equipment business, as well as its after-market business going into next year.

Today, 97% of the 1,031 CAPS members rating Bucyrus expect it to outperform the broader market.

NutriSystem
Weight-loss management company NutriSystem is looking to expand its presence with its recent distribution deal with Wal-Mart Stores, which lets people buy into the NutriSystem program at Walmart stores. Although consumers still need to go to the NutriSystem website to start delivery of their ready-to-eat meals after purchasing a card from Wal-Mart, NutriSystem sees the retail card approach as an extension of its direct-to-consumer business model and looks to build brand awareness and reach a new segment of consumer.

The company hopes to repeat the magic from a similar deal with Costco (Nasdaq: COST) struck back in January, and expects to reach customers on a much larger scale with the Wal-Mart deal.

The recession has forced many consumers to cut back on unnecessary purchases, and NutriSystem's year-over-year revenue came in lower in the third quarter. But it's seeing improvement with a 20% gain in new customers over the second quarter, and it plans to partner with more retail stores next year, giving 91% of the 925 CAPS members rating NutriSystem confidence that the stock will beat the market going forward.

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 140,000-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.

Like this article? Get our best articles delivered direct to your inbox at no cost. Sign up for Foolwatch Weekly by entering your email below.

The Motley Fool Stock Advisor service looks for companies with strong management poised to beat the market over the long haul. To see all the stocks that have helped Tom and David Gardner beat the market by 47 points on average, take a free 30-day trial.

Fool contributor Dave Mock has his own story, but there's no "happily ever after" at the end of it. He owns no shares of companies mentioned here. Akamai Technologies is a Rule Breakers recommendation. Costco Wholesale is a Stock Advisor pick. Costco Wholesale and Wal-Mart Stores are Inside Value selections. The Fool owns shares of Terex and Costco Wholesale. The Fool's disclosure policy has the momentum of a freight train, but can stop on a dime.

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Related Tickers

11/20/2009 4:00 PM
BUCY $52.06 Down -0.55 -1.05%
Bucyrus Internatio… CAPS Rating: ****
LIZ $4.66 Up +0.11 +2.42%
Liz Claiborne, Inc… CAPS Rating: ***
COST $60.06 Down -0.42 -0.69%
Costco Wholesale C… CAPS Rating: ****
TEX $20.30 Down -0.80 -3.79%
Terex Corp CAPS Rating: *****
JOYG $54.03 Down -0.83 -1.51%
Joy Global, Inc. CAPS Rating: *****
NTRI $22.79 Up +0.09 +0.40%
NutriSystem, Inc. CAPS Rating: ***
AKAM $23.94 Down -0.31 -1.28%
Akamai Technologie… CAPS Rating: *****

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Municipal bond: A municipal bond is a bond issued by a local government agency, usually to finance projects like construction of a school, improvement of a sewer system, etc. Municipal bonds are unique in that their interest is free of federal income taxes. They are often termed tax-free bonds. A mutual fund that invests in these bonds is often called a tax-free bond fund.

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