Are These Stocks Bouncing Back?

However hard the market slams a stock, there's always the chance it'll come bouncing right back. We'll consult our Motley Fool CAPS community to find shares on the rebound, examining one specific sector of the economy in search of companies with rising CAPS ratings.          

There are 81 stocks listed under consumer durables in the CAPS' screener, but we've found more than a few that are well-respected with four- and five-star ratings. Those accolades mean our 170,000 CAPS members are confident that these stocks will beat the market in the months ahead; let's see what members are saying about the ones below:

Source: Motley Fool CAPS; Yahoo! Finance.

The markets may be feeling better about the economy after a few reports have offset the drumbeat of negativism, and with the S&P 500 up 8% over last year, CAPS consumer durables stocks did significantly better. The average stock is up 31% from the year-ago period. Of course, bolstering those returns were performances like those by Libbey, up more than 250% year over year, and theater and lighting system specialist Ballantyne Strong (NYSE: BTN), which doubled in the same period.

Let's take a closer look at why investors think the three companies in our chart won't be jumping from the frying pan into the fire.

Some spring in its step
Diversifying your business often mitigates risk. The theory being, if one business turns south, the others will prop up the whole. That is, unless all of your lines are affected by an economy in tatters. Fortune Brands has just that sort of business. Last quarter's better-than-expected results had more to do with the expiration of the homebuyers' tax credit and order timing issues than actual demand.

Yet it was enough to allow it to raise its earnings forecast for the year. Considering that Callaway Golf pulled its forecasts for the year because not as many people are playing golf this year, while Diageo (NYSE: DEO) saw North American volumes decline across almost all of its brands, maybe Fortune is exhibiting too much wishful thinking. Building supplies maker Masco (NYSE: MAS) was also forced to cut its outlook for the year as a result of slack housing starts.

Earlier this summer, CAPS member FoolishElephant said Fortune Brands' ability to generate strong cash flows would sustain it through the rough periods and renewed growth will happen when the economy improves:

Currently, the market has little appetite for FO, which will lead to more attractive price and div yield in the near term. Accumulating shares through a company sponsored DRiP account is a great way to build long-term equity as this company returns to strong growth in future years.

Circuit overload
The last thing the toy industry needs is a replay of the recall summer that plagued sales in 2007 when Chinese-made toys came under closer scrutiny. Yet here's Mattel once again announcing a massive recall, this time of 10 million toys and products from its Fisher-Price line.

While it sometimes seems regulators want us to play only in padded rooms, the reputational hit from recalls can set back a company for years. The stock of RC2 still hasn't recovered from the recalls of its Chinese-made Thomas the Tank Engine toys three years ago. Hasbro (NYSE: HAS), on the other hand, which escaped unscathed from the industry fiasco, enjoys a valuation that's about 66% higher than it was back then.

Yet as CAPS member michiganmike4msu notes, even with recalls Mattel has a respected name:

M. is a major toy manufacturer, with a long history and great name recognition. Parents always try to do well for their kids at Christmas, birthdays.

Tell us on the Mattel CAPS page if you think it's worth playing with this toymaker.

Driving a bargain
National Presto Industries is the Ron Popeil of kitchen gadgetry in the marketplace, with fryers, pizza ovens, bacon cookers, and popcorn poppers. But wait, there's more! Some smart analysts think its investment worthiness is more as a short candidate because its earnings quality is weak. Simply subtracting net income from operating cash flows can give an investor a revealing looking at a company's ability to generate good returns over time.

CAPS member steelheart100 thinks critics are wrong, and finds a financially sound business under the hood:

Small, conservatively managed company out of Eau Claire, WI. The balance sheet is pristine and they make products people buy in good times and in bad times. You wont double your money overnight, but if you have a 10 year time line and reinvest your dividends you will do a lot better thaan the bank without a whole lot of worry in the meantime.

The ball's in your court
There are many factors that go into whether a stock is a buy or sell, so it pays to start your own research on these stocks on 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. Head over to CAPS today and share your thoughts with other investor analysts on whether you think these stocks are ready to bound higher.