3 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 Amylin Pharmaceuticals jumped 20% a couple of weeks ago when potential competitor Roche's diabetes drug hit a nasty delay in its development.  

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 165,000 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 15% 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

Exide Technologies (Nasdaq: XIDE  )

****

27%

Sunoco (NYSE: SUN  )

****

21.3%

ARM Holdings (Nasdaq: ARMH  )

***

19.1%

Source: Motley Fool CAPS. Price return from May 28 through June 25.

Exide Technologies
Shares of Exide have been struggling to recapture their 2010 highs after the automotive battery maker said Wal-Mart would no longer sell its batteries earlier this year. It generated higher fiscal fourth-quarter results that helped it turn a profit compared to a loss last year, and the company expects improving demand to continue, but not all investors are sold on the company's new profitable ways just yet. Positive progress is being made though as Exide inked a contract with Toyota (NYSE: TM  ) earlier this year to provide batteries for the Highlander SUV and it recently struck a licensing deal with Honeywell. An improving auto industry has also led competitor Johnson Controls (NYSE: JCI  ) to bump up its full-year earnings guidance, giving some investors further reason to be bullish. Exide's five-star status in CAPS has come to an end for now, but four-stars is still a strong endorsement as roughly 97% of the 362 members rating Exide Technologies still see it as a market-beating investment.

Sunoco
The refining business hasn't been so fun for Sunoco and peers like Valero (NYSE: VLO  ) in the last few years, as both companies have struggled to reverse negative trends of declining demand and reduced margins. But things may be looking up as Sunoco expects its first refining profit in more than a year for the current quarter and is looking to unlock the value in its metallurgical coke business with a spinoff of the unit. Many investors think the worst days in oil refining are over though, and 91% of the 611 CAPS members rating Sunoco believe it to outperform the broader market.

ARM Holdings
Takeover rumors have been swirling around ARM again, and investors are bidding shares up based on the belief that some tech giant will pay handsomely to control the company. But the company's shares have already been on fire in the past year as the smartphone market that is a big buyer of ARM's designs has continued to see strong demand. As others like Intel have been looking to muscle into ARM's space, the embedded chip designer recently teamed up with IBM (NYSE: IBM  ) and several other companies to optimize Linux-based software for tablets, smartphones, and other devices, which could extend its reach into more corners of the market. With ARM's chip technology already found in most mobile devices, many CAPS members like the competitive position the company is in. Overall, about 93% of the 491 members rating ARM Holdings are bullish on its chances to outperform the S&P.  

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 165,000-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.

The Motley Fool Stock Advisor service looks for companies with strong management poised to beat the market over the long haul. To see all the stocks that have helped Tom and David Gardner beat the market by 60 points on average, take a free 30-day trial.

Fool contributor Dave Mock has his own story, but there's no "happily ever after" at the end of it. He owns shares of Intel. Wal-Mart and Intel are Inside Value recommendations. The Fool has created a covered strangle position on Intel. Motley Fool Options has recommended buying calls on Intel. The Fool's disclosure policy has the momentum of a freight train, but can stop on a dime.


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