5 Stocks Breaking Out

Volatile markets seem to be the norm these days, as stocks gyrate through ups and downs on a daily basis. But sometimes buyout news and other short-term forces can send individual stocks soaring by 10%, 25%, even 50% -- even on the market's worst days.        

For example, shares of Broadview Security jumped 32% when it was announced that Tyco International (NYSE:TYC) would swallow the company for $2 billion in cash and stock and fold it into Tyco's own ADT brand.

But beyond less-predictable events like that one are stocks with fundamentally compelling reasons behind a big move. 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. Here's an example of how we can use the collective wisdom of more than 145,000 CAPS members to filter out the noise and find companies with strong potential.

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. Then we can use the insight of the CAPS investment community to add some context to these market movers.

Source: Motley Fool CAPS. Price return from Dec. 31 through Jan. 29.

American Capital
American Capital's shares started the new year with some welcome gains, as the company approaches an extended deadline of March 15 to reach a debt restructuring agreement with lenders. Its shares have lagged peers' such as Ares Capital (NASDAQ:ARCC) and Apollo Investment (NASDAQ:AINV) in the past year, and the company has a lot riding on reaching an agreement for an out-of-court exchange, as the alternative isn't pretty (filing for Chapter 11 bankruptcy protection).

American Capital has maintained a four-star rating in CAPS for nearly six months, though, as many members believe there's underlying value in the company's large amount of portfolio investments. It's managed to sell off investments to raise capital, but also recently noted that selling portfolio investments in this environment will continue to be difficult and it looks to raise capital by selling more shares below their net asset value.

About 95% of the 2,071 CAPS members rating American Capital think it is a market-beating investment.

Conexant Systems
Conexant Systems blew past Wall Street's expectations in a number of metrics in its latest quarterly report, topping earnings, revenue, and margin estimates. The company also pulled in stronger operating cash flow than previous quarters and investors quickly showed their approval by bidding shares up by more than 20%. Larger peer Marvell Technology Group's (NASDAQ:MRVL) lights-out performance has it sitting on a load of cash with no debt, but liquidity has been a concern for Conexant, and some investors like the progress the company has been making to improve the balance sheet.

The small-cap fabless semiconductor chip maker has taken significant steps, such as paying off and refinancing debt, selling property, and raising capital. Conexant expects continued strength in its fiscal second quarter, but a good number of CAPS members have cooled off on the stock as its rating has recently fallen from five to three stars, with about 86% of the 282 CAPS members rating it expecting it to outperform the market.

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 5,400 stocks that our 145,000-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.