3 More Stocks for Bottom-Fishers

With all the volatility in the markets today, there's no shortage of market seers trying to call a bottom. Man of the Year Ben Bernanke called a bottom not once, but twice, but some economists still argue that the worst is yet to come.

Investors should savor big declines, when pessimism beats good companies down to attractive prices. That's why we here at the Fool -- and 165,000-plus investors like us -- look to the Motley Fool CAPS community to help distinguish the real opportunities from languishing companies driven by speculation.

A real bottom or another leg down?
Of course, there's no foolproof method for timing a market bottom. But CAPS has a great balance of both quantitative and qualitative resources available on 5,400 stocks, and even a nifty stock-screening tool to help investors quickly zero in on potential opportunities.

So to find stocks already bouncing back from a recent bottom, I've used the CAPS screener to filter out $100 million-plus companies with stock prices that appreciated by at least 15% in the past 13 weeks even while they remain at least 15% below their 52-week high.

Source: Motley Fool CAPS. Results from April 23 through July 19.

None of our highlighted stocks gets resounding accolades from CAPS members; only metal hose maker OmegaFlex draws even a three-star rating. Vonage shares have pushed higher since the company reported record first-quarter profits on the success of its international calling plan. But that still hasn't nudged a stock that has come back off a bottom-feeding one-star rating. And though US Airways hasn't budged from its one-star CAPS rating yet, investors are paying more attention to the airline sector lately because more people have been flying.  

The bottom case
CAPS members have laid out several good reasons why things might get better for US Airways. Activity has been picking up in the industry, suggesting a possible rebound for US Airways and other carriers. Business travel has picked up significantly, and the company reported 22% higher revenue per available seat mile for June. Peers such as American Airlines parent AMR (NYSE: AMR) reported higher traffic numbers for June following an increase in May. Even the notoriously bad customer-satisfaction numbers that plague airlines are showing signs of improvement.

Investors and analysts have also become more optimistic after US Airways said it expected to report positive earnings for the second quarter, which should be a good one for other carriers, too. Delta (NYSE: DAL) already reported its largest quarterly profit in a decade, and United Airlines parent UAL Corp.'s (Nasdaq: UAUA) profit jumped to $273 million from $28 million a year ago. Analysts forecast Continental (NYSE: CAL) to swing back into the black for the quarter and also see Southwest Airlines (NYSE: LUV) posting a big jump in earnings.

Or further to fall?
Even though US Airways has some fundamentals working for it, not all its engines are pulling their weight: Traffic and capacity dropped for the first half of the year, despite an increase in recent months, and its exposure to unhedged fuel prices makes some investors nervous. Like several other airlines, US Airways carries a large debt load with interest payments that weigh on earnings, and has a history of red ink on its income statement. Also, in recent years, its free cash flow has been negative, and that may be difficult to turn around in a highly competitive industry. The recent reversal in some trends hasn't been enough to move the needle with many investors: The company's CAPS rating has been stuck at the lowest one star for nearly three years, and many CAPS members see too many factors working against the company and the industry.

What's your call?
Overall, just 56% of the 793 CAPS members rating US Airways see it outperforming the broader market. For my part, the specter of higher fuel prices alone in these macroeconomic conditions is enough to scare me away.

But what ultimately counts is your own opinion; CAPS is just there to help you form it. The best part is that the Motley Fool CAPS database is all free, and you can even add your own insight on any of the 5,400 stocks that our 165,000-plus members have covered.