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 Playboy Enterprises jumped 41% after owner Hugh Hefner offered to buy out the shares he doesn't already own.

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.

Source: Motley Fool CAPS. Price return from June 18 through July 16.

CF Industries
Fertilizer producer Agrium (NYSE: AGU) has been talking turnaround following its first-quarter loss, and peer CF's shares have recently reversed course thanks to some positive signs in the industry as well. A U.S. report recently showed smaller than expected inventories from 2009's corn crop and Norwegian Yara International posted bullish second quarter results helped by higher global nitrogen prices. Many CAPS members like CF Industries' improved position following its acquisition of Terra Industries and like the long-term outlook for fertilizer demand as 96% of the 1,115 CAPS members rating CF Industries expect it to beat the broader market.

Biovail
Specialty pharmaceutical company Biovail reported a 28% jump in first-quarter revenue, helped by strength in one of its key revenue drivers Wellbutrin XL, for which it acquired commercialization rights from GlaxoSmithKline (NYSE: GSK) last year. It also saw strong sales of other products including its generics portfolio, a number of which are distributed by Teva Pharmaceutical (Nasdaq: TEVA). Despite a quarterly loss, many investors have remained more focused on the potential in its recently announced merger with Valeant Pharmaceuticals, which sent shares soaring. The deal is expected to enable significant cost savings and create a much stronger player with the enhanced ability to tackle key drug markets like neurological drugs. In CAPS, 92% of the 483 members rating Biovail believe it will be a market-beating investment.  

IDT
After losing nearly all of their value by late 2008, shares of IDT have been on fire over the past year, rising more than 650%. The diversified company, with operations ranging from prepaid phone cards to reselling electricity, recently swung back to a fiscal third-quarter profit. And investors have been responding positively to the company's oil shale venture in Colorado with partner Total SA (NYSE: TOT) following an appearance on CNBC by IDT's CEO. Not all CAPS members see the stock as a good play though and the community hasn't afforded the company any better than two stars for years, as only 71% of the 94 members rating IDT 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.