3 Stocks Shaking the Market

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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 for even bigger and better gains to come.

Today, we've listed three stocks that made some of the biggest upward moves over the past month, which we'll pair 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.


1-Month % Change*

CAPS Rating

American Italian Pasta (Nasdaq: AIPC  )



Broadwind Energy (Nasdaq: BWEN  )



Avanir Pharmaceuticals (Nasdaq: AVNR  )



*From June 14 to July 12.

As the markets whipsaw to changes in consumer sentiment, the S&P 500 has remained essentially flat. So before we get shaken out again, let's see why the CAPS community thinks some of these companies might continue to outperform the market.

A mighty temblor
Private-label food maker and owner of Post cereals Ralcorp (NYSE: RAH  ) has benefitted from the recession, as consumers switched from name-brand groceries to store brands to save money. While its shares are essentially unchanged from their price two years ago, operating profits in that time period have nearly doubled on 50% higher revenue.

That's not surprising, really, since the Wal-Mart (NYSE: WMT  ) value proposition has become evident during the recession. The discount retail giant accounted for 19% of Ralcorp's profits in 2009. To supplement that stream of private-label fare, Ralcorp bought the Post cereal business from Kraft (NYSE: KFT  ) in 2008, giving it a line of higher-profit offerings that now account for more than half of Ralcorp's revenues. Post is the third-largest branded cereal, behind Kellogg and General Mills (NYSE: GIS  ) .

Into this mix comes American Italian Pasta, which Ralcorp is buying for $1.2 billion. While Ralcorp is already a leader in private-label pasta, AIP gives it access to strategically located manufacturing facilities. The cereal business has suffered declining margins of late, as brand names pushed back against the inroads made by private-label manufacturers and cut prices to be more competitive.

While Ralcorp has made more than 20 acquisitions over the past decade (accounting for much of that revenue growth I mentioned), AIP gives it one of the largest pasta makers in North America. Ralcorp's probably getting AIP at something of a discount, since the latter has a troubled past and flagging sales and profits have been flagging. Ralcorp's distribution network should help the pasta maker deliver tastier results, but the debit it's taking on to finance the deal has analysts worried.

Earlier this year, CAPS All-Star clark1943 considered Ralcorp undervalued, given the growth prospects facing its diversified product line: "If the economy continues to struggle this should be a good defensive stock as they produce a variety of packaged food products. I think the company is about 11% undervalued at its current price."

Now that American Italian Pasta will be joining its portfolio of brands, head over to the Ralcorp CAPS page and let us feast on your views for the future.

A speedy opportunity
Wind energy has been facing some gale-force headwinds; over the past few years, even the top names have suffered. Vestas has lost about half its enterprise value since 2007, while turbine maker Gamesa trades at about 25% of its value from three years ago. It's no surprise that smaller outfits like Broadwind Energy are a third of their former selves, but with renewed interest in wind's potential, they just might be outstanding values at current prices.

Broadwind just hooked up with Gamesa in a deal to provide wind towers to the turbine maker for installation later this year. CAPS member 08PortfolioModel thinks that's a catalyst for new growth. Still, though 81% of CAPS members who've rated Broadwind believe it will outperform the broad market averages, its two-star CAPS rating suggests that our collective community thinks there are better places for your money right now.

No laughing matter
If one analyst's expectations are correct, Avanir Pharmaceuticals is also undervalued, though saying so caused a spike in its share price. The analyst in question believes the FDA will give a favorable review to the pharma's lead drug candidate to treat uncontrollable crying and laughing, which is tied to a neurological condition called Pseudobulbar Affect.

The agency, however, has been notoriously fickle of late. If it rules against Avanir, you could have quite a few investors crying uncontrollably at the loss. But zandi561 is confident all the same:

This time around it is expected that Avanir got it right with Zenvia. Lower dosage still maintains strong efficacy. FDA concern about patients overdosing has been addressed through lower dosage. QT levels are normalized after homeostasis.

Shake, rattle, and roll
It pays to start your own research on these market-shaking stocks 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.

Wal-Mart Stores is a Motley Fool Inside Value recommendation. Kellogg is a Motley Fool Income Investor selection. 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 here. You can shake, rattle, and roll The Motley Fool's disclosure policy, but it still won't break.

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Rich Duprey

Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time.

Having made the streets safe for Truth, Justice and Krispy Kreme donuts, he now patrols the markets looking for companies he can lock up as long-term holdings in a portfolio. So follow me on Facebook and Twitter for the most important industry news in retail and consumer products and other great stories.


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Related Tickers

7/27/2010 4:00 PM
AIPC.DL $53.00 Down +0.00 +0.00%
AVNR.DL $0.00 Down +0.00 +0.00%
BWEN.DL2 $2.76 Up +0.23 +9.09%
Broadwind Energy,… CAPS Rating: **
GIS $61.68 Down -0.40 -0.64%
General Mills, Inc… CAPS Rating: *****
KRFT $0.00 Down +0.00 +0.00%
Kraft Foods, Inc. CAPS Rating: *****
RAH.DL $0.00 Down +0.00 +0.00%
Ralcorp Holdings,… CAPS Rating: ***
WMT $67.50 Up +0.29 +0.43%
Wal-Mart Stores CAPS Rating: ***