Drink In These 5 Top Stocks

Whether it's the corporate lunchroom, your cubicle, or the local watering hole after work, there are regular places we gather to discuss news, sports or -- if you're like us -- stocks. Here at Motley Fool CAPS, we gather around the virtual water cooler daily to rate stocks and delve into their merits as investments.

Our 145,000-strong CAPS community -- where members give the thumbs-up or thumbs-down to some 5,300 stocks -- seeks businesses it thinks will outperform the market. Below we'll take a look at some of the most popular and talked-about stocks in the CAPS universe, and examine whether you think they'll continue their winning ways.

A tall drink of water
Going into the holiday shopping season, Bed Bath & Beyond investors (I'm one of them) might have been hopeful that the home furnishings retailer's steady trajectory of recovery would continue. Yet revised sales numbers for November show that retailers got a high dose of tryptophan and went off to slumber for the month.

Depending on whose report you read, industry same-store sales were down just under 1% or were up just under 1%. But either way you look at it, it was not encouraging news as even the biggest sales weekend of the year couldn't turn the tide. Sales for the four-day shopping extravaganza were flat from the year-ago period.

While Wal-Mart's (NYSE:WMT) lackluster third-quarter earnings report  might have been a harbinger of the retail doom, Bed Bath & Beyond remains financially sound enough to survive a second market collapse and prevent itself from going the way of Linens 'N Things. It has no long-term debt on its balance sheet and more than $1 billion in cash, plenty of cushion for any economic hard landing.

The CAPS community remains supportive of the retailer, with 82% of those weighing in suggesting it will outperform the broader market averages. Yet its two-star rating indicates they believe there might be better places for your money right now.

Nothing to marvel at
Some sectors of the economy may look like they're strengthening, but the gains are being made on the back of unsustainable cuts to expenses. Marvell Technology, for example, reported yesterday that its third-quarter profits soared over the year-ago period, but they came about as a result of falling expenses. Revenues inched upward only 2% year over year.

Marvell's not alone in this. According to a report by Thomson Reuters last month, 80% of the companies in the S&P 500 that reported third-quarter earnings beat analyst expectations by almost 15%, but only 58% of them exceeded revenue forecasts. The yawning chasm between revenue and profit performance shows considerable lack of end-user demand, which with high unemployment and a government constrained in its ability to pump even more money into the economy, could cause a severe collapse in the quarters ahead.

But the demand for smartphones leads CAPS member TexasLonghorns to suspect the chip maker will continue to outperform the market averages.

Still has a pulse
One company that hasn't had to rely solely upon cost-cutting measures is medical-device maker Medtronic, which reported strong revenue growth as profits increased 59% over last year, easily beating analyst forecasts. It's the device maker's ability to generate healthy cash flows that's attracted CAPS member chrismil15: "Overall great company with a nice cash flow that is relatively cheap right now."

Medtronic's implantable heart monitoring business has shown better results than Boston Scientific (NYSE:BSX), whose own third-quarter results had analysts believing the market for the devices wasn't as good as once suspected.

Gather 'round
With so many good opinions about today's top companies, why not grab a pointy paper cup from the dispenser and join us at the Motley Fool CAPS watercooler? Your input can help guide other investors to stocks with bright prospects for growth. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page.

Sign up today for the completely free service, and let us hear what you have to say about the great and almost-great companies that interest you.