3 Stocks Shaking the Market

Some stocks are one-hit wonders, making a big splash when they first appear, then quickly fizzling into obscurity or oblivion. But for other stocks, that initial big move is only a preview of even bigger and better gains.

Today, we're listing three stocks that made some of the biggest moves up over the past month and we'll pair them with the ratings issued by our Motley Fool CAPS community. The higher each stock's rating, the greater CAPS members' faith in that company's ability to keep on beating the market.

Company

1-Month % Change

CAPS Rating
(out of 5)

MELA Sciences (Nasdaq: MELA  )

46.7%

***

American Apparel

44.1%

**

US Gold (NYSE: UXG  )

37.5%

***

One-month % change from May 25 to June 24.

While the markets whipsaw to changes in consumer sentiment, the S&P 500 was essentially flat over this time. So before we get shaken out again, let's see why some members of the CAPS community think two of these companies might continue to outperform.

A mighty temblor
After one false start, and with a decision looming in August about its handheld device for discovering melanomas, MELA Sciences has the opportunity to finally make some money and become a major growth company. While there's no direct competitor with a similar device on the market -- potentially giving the company a clear field should the Food and Drug Administration approve it -- optical imaging is a pretty broad industry. General Electric (NYSE: GE  ) and Raytheon (NYSE: RTN  ) are large, well-funded potential rivals that can use their expertise to knock MELA Sciences back (or acquire it, one would imagine).

One other risk I see here is that the detection of melanomas is based on a proprietary database of pigmented skin lesions. When the MelaFind device is used, it emits light waves to capture images of suspected lesions, and a sophisticated algorithm trained on MELA's database analyzes the images to provide information on whether a biopsy is needed.

While there's always the potential for false positives, phase 3 clinical trials last year showed the MelaFind to be incredibly accurate. Yet the device is only as good as the database. MELA Sciences says its database is the largest in the U.S., but plenty of other businesses found it was possible to pierce their shields even though they had sophisticated, proprietary databases.

Student loan guarantor First Marblehead (NYSE: FMD  ) , for example, was brought to its knees when The Educational Resources Institute (TERI) filed for bankruptcy protection after its 20-year database on how student loans performed broke down. First Marblehead lost 96% of its value. CompuCredit (Nasdaq: CCRT  ) , which provides branded credit cards to consumers with low FICO scores (scale 300 to 850), also had a proprietary database designed to keep defaults low, but its stock has fallen more than 90% from its heights because the recession upended the conventional wisdom it had used.

That doesn't mean MELA Sciences isn't a potential winner; it's just that investors need to recognize that the moat surrounding it might not be as deep as originally thought. CAPS member ellipsoid realizes the risk inherent in MELA Sciences and understands there's a lot riding on FDA approval.

This pick is pure speculation! MELA has FDA review board scheduled for August 26 2010 for their new non-invasive skin cancer detection device, MelaFind. Research trails have been very positive with the device having better results than dermatologists. I feel that there may be a run up prior to the meeting date and IF there is a positive review a spike up in the share price. However, if the [review] is negative this stock will probably go [through] the floor because MelaFind is the only product at the moment.

A speedy opportunity
As the price of gold in general has gone up, US Gold's stock has jumped with it. Yet there doesn't seem to be much reason to warrant the move other than the company's name. The gold and silver exploration company has properties in the U.S. and Mexico, but no revenues on its income statement. Indeed, CAPS All-Star goldminingXpert derisively says US Gold's real name ought to be Mexican Silver Corp, because its El Gallo project south of the border possibly has the most potential, but even then it is spending more time promoting itself instead of drilling.

It could be that investors are hoping that lightning strikes twice for US Gold CEO Rob McEwen. He was founder and former CEO of Goldcorp (NYSE: GG  ) , one of the top names in the business, and that pedigree attracted another All-Star CAPS member, TMLonggun, earlier this year.

Rob Mac hugely undervalued industrial and precious opportunity with silver. Sandwiched between huge producers that used to host huge deposits in the same geologic trend that must replace declining reserves with fresh juniors. Lots of land and good discovery results so far.

Shake, rattle, and roll
With these stocks shaking the market this past month, it pays to start your own research on them at Motley Fool CAPS. 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.

The Fool owns shares of MELA Sciences. Try any of our Foolish newsletter services today, free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings. You can shake, rattle, and roll The Motley Fool's disclosure policy, but it still won't break.


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