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 3Com (NYSE: COMS ) jumped 31% when it was announced that Hewlett-Packard would diworsify by buying the networking equipment maker for $2.7 billion in cash.
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 20% 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
|
|
China Yuchai
|
****
|
55.7%
|
|
Incyte
|
***
|
22.3%
|
|
Oshkosh (NYSE: OSK )
|
**
|
20.9%
|
|
RadioShack
|
*
|
25.4%
|
|
Priceline.com (Nasdaq: PCLN )
|
*
|
20.1%
|
Source: Motley Fool CAPS. Price return from Oct. 16 through Nov. 13.
Flexing military muscle
While Oshkosh's sales to construction companies are suffering in the current economy, its sales to the military have remained a bright spot in otherwise dismal financials. Military contracts have helped the company generate a reported $850 million in free cash flow for fiscal 2009, and it's made good progress on paying off its large debt load. It beat out competitors Force Protection (Nasdaq: FRPT ) and Navistar (NYSE: NAV ) for an M-ATV contract several months ago, and recently scored a $428 million order for 1,000 more. The order was the fifth in a series of wins, bringing the total to more than 6,200 for more than $3.2 billion.
During a recent tour of Oshkosh's production plant, U.S. Secretary of Defense Robert Gates praised the speed at which Oshkosh is cranking out the trucks to send to Afghanistan. The Department of Defense has made it a high priority to boost efforts against roadside bombs and said it could order more if more troops are sent to Afghanistan. With that kind of wind in the company's sails, it's not surprising to find 88% of the 783 CAPS members rating Oshkosh still bullish.
Still no love for Captain Kirk
Never mind that Priceline.com has outperformed the S&P 500 by a long shot so far this year -- a whole lot of CAPS members still pooh-pooh the stock. Many investors remain skeptical that a weak consumer spending environment that's caused falling revenues at airlines like JetBlue (Nasdaq: JBLU ) and Southwest Airlines (NYSE: LUV ) can support continued performance of the online travel service.
The company's recent uptick came after it reported another better-than-expected quarter with earnings that more than tripled, including one-time items, compared to a year ago. Excluding items, net income still jumped 44%, and the company pulled in 30% higher revenue as more customers sought out online travel discounts over the summer travel season.
Priceline is forecasting continued revenue growth in the fourth quarter, and like competitor Expedia, it is seeing stronger international growth. Its European hotel-booking website, Booking.com, had big traffic growth in the quarter, and the company's international gross bookings rose more than 37%. Even so, only 69% of the 865 CAPS members rating Priceline.com expect it to outperform the market today.
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.
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 52 points on average, take a free 30-day trial.
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