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 up by 10%, 25%, even 50% -- even on the market's worst days.
For example, shares of NuVasive jumped 35% on Friday after company officials said that insurers Aetna and UnitedHealth Group (NYSE: UNH ) had reversed their policy and would now cover its XLIF spinal surgery procedure.
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 150,000 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 30% 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.
|
Company
|
CAPS Rating
(out of 5)
|
4-Week
Price Change
|
|
Curis
|
*****
|
38.8%
|
|
China-Biotics
|
*****
|
33.2%
|
|
TASER International (Nasdaq: TASR )
|
***
|
34.0%
|
|
Whole Foods Market (Nasdaq: WFMI )
|
***
|
30.4%
|
|
Wave Systems (Nasdaq: WAVX )
|
*
|
83.6%
|
Source: Motley Fool CAPS. Price return from Jan. 29 through Feb. 26.
TASER
Investors have been bidding up shares of TASER recently, anticipating that the company will continue to do a lot of business over the next 18 months. It recently reported a 31% increase in net sales for the fourth quarter and a 23% jump in earnings.
While increasing U.S. defense spending bodes well for companies like Lockheed Martin (NYSE: LMT ) and Raytheon (NYSE: RTN ) , federal and military sales at home and abroad are also becoming a more significant part of TASER's business. And an increase in stimulus-driven orders hasn't hurt, either: Sales were boosted recently because of business from law enforcement agencies. With additional revenue streams from new products, TASER looks for improving gross margins, and limited research and development spending is expected to help improve the bottom line as well.
Many CAPS members like the momentum behind the company, with 93% of the 1,139 members rating TASER expecting it to outperform the market.
Whole Foods
No doubt consumer spending remains significantly constrained -- and Whole Foods has experienced increased competition from grocers like Kroger (NYSE: KR ) and Safeway pushing healthier foods. Nonetheless, there have been fundamental improvements for the company because more shoppers are making their way back into its stores.
Whole Foods' recent quarterly report showed an improvement in sales and a surge in earnings compared with the previous year, and the company offered higher growth estimates for 2010. The momentum helped lift shares to new 52-week highs recently, and, while some CAPS members are concerned about the recent run-up, others still like the long-term outlook for the company.
When looking at the bulls versus the bears in CAPS, it's a mixed bag, with 86% of the 4,192 members rating Whole Foods believing the stock will beat the broader 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 150,000-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.
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