5 Stocks Breaking Out

Volatile markets seem to be the norm these days, as stocks gyrate through ups and downs on a daily basis. 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 Palm rose 26% after Hewlett-Packard announced it would pay a surprisingly high premium for the company: $5.70 cash per share.

Beyond less-predictable events like that 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 160,000 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 20% in the past four weeks, a market cap of greater than $100 million, and a beta of less than 3. Then we'll use the insight of the CAPS investment community to add some context to these market movers.

Source: Motley Fool CAPS. Price return from April 1 through April 30.

USG
Although U.S. homebuilding and other construction is still mired in weakness, and building material supplier USG posted a first-quarter loss, signs of stabilization and some improvement in demand for wallboard were enough to keep its shares pushing higher. The company has cut costs, and reduced industry capacity has enabled it to raise prices, giving some investors encouragement that the bottom line will improve.

While some CAPS members remain wary of companies tied to the construction sector, 93% of the 1,919 members rating USG expect it to outpace broader market returns.     

Array BioPharma
Back in December, investors bid up shares of Array BioPharma when it announced a partnership with Amgen (Nasdaq: AMGN) for its phase 1 diabetes drug that boosted Amgen's pipeline and provided Array with much-needed cash. Array has once again teamed up with a deep-pocketed partner in a cancer drug development deal with Novartis (NYSE: NVS). In addition to filling Array's coffers with upfront cash, some analysts see Novartis' oncology experience as a good fit for Array's cancer drug candidates.

Some CAPS members note the risks of investing in a development stage company, but the backing of larger companies helps alleviate some of those fears. Overall, 93% of the 245 members rating Array BioPharma have faith that it will be a market-beating investment.                            

Vonage
Once a stock left for dead, things started looking up for Vonage last year when it began making its way into the mobile world with data call applications for the iPhone and other smartphone platforms. It's continuing to leverage its brand and expand with its services now available on Google's Android platform through AT&T and T-Mobile. Once a serial money loser, Vonage made financial progress last year and looks to continue its push into the mobile space, but the stock still has a weak following in CAPS.

Members remain uncertain about its ability to generate sustainable earnings and still question the company's ability to match up with heavyweight and low-cost competitors like Skype, which has also been building its mobile presence on the iPhone and many Android phones. At this point, a mere 28% of the 1,493 CAPS members rating Vonage expect 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 160,000-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.