3 Stocks Shaking the Market

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, despite the incredible volatility in the market, 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.

Stock

1-Month Change^

CAPS Rating
(out of 5)

ZOLL Medical (Nasdaq: ZOLL  ) 71.5% ***
ISTA Pharmaceuticals (Nasdaq: ISTA  ) 65.4% ***
Arena Pharmaceuticals (Nasdaq: ARNA  ) 49.3% **

Source: FinViz.com. ^From Nov. 16 to Dec. 16.

While you were out, the markets rebounded, but they may turn tail again if Europe's fragile financial system falls apart. 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
Where the market had been discounting the probability that ZOLL Medical would be able to maintain the same Medicare reimbursement schedule it previously enjoyed for its LifeVest wearable defibrillator, the medical-device maker has been saying it has the support of the medical community and believes the Centers for Medicare & Medicaid Services will make the right decision. LifeVest sales in the fourth quarter were up 52% and were 57% higher for the year.

So shares got a boost last month from those results and then again last week when it reported CMS was leaving reimbursement rates as they were. With sales booming and confidence that reimbursement will not be affected, shares are soaring.

Yet I issued a word of caution last month that medical-device makers like ZOLL, Medtronic (NYSE: MDT  ) , and Edwards Lifesciences (NYSE: EW  ) face a 2.3% excise tax as part of Obamacare being implemented, and pointed to Stryker and Boston Scientific as just two companies that are already either cutting overall workforce or exporting jobs overseas as a result.

Tell us on the ZOLL Medical CAPS page or in the comments section below if you think reimbursement rate stability will trump new taxes, then add ZOLL to your watchlist to see if it avoids going into cardiac arrest.

No time to go all Hamlet on us
Playing hard to get can be a risky strategy. Your suitor can become disenchanted and abandon the pursuit just as easily as he can redouble his efforts. So ISTA Pharmaceuticals is walking a fine line by first dragging its feet on the takeover overtures made by Valeant Pharmaceuticals (NYSE: VRX  ) and then rejecting outright the big premium offered. Valeant says ISTA has only until the end of January to make a decision -- it's even willing to raise the offer if ISTA makes a concerted effort to consider the bid -- before it walks away.

Investors have bid ISTA's stock above the $6.50 offer price, undoubtedly believing the pharmaceutical will not continue playing so coy and that Valeant will come through with an even better deal. But at this point, much of the potential gain has already been priced in, and if ISTA's management continues being intransigent and the deal falls through, the stock will plummet if Valeant walks away. Now may be the time to realize those profits that are on the table.

Monitor the negotiations by adding ISTA's stock to the Fool's free portfolio tracker.

Fat chance
After VIVUS (Nasdaq: VVUS  ) won a reprieve from the FDA to continue testing its anti-obesity drug Qnexa, some analysts concluded that Arena Pharmaceuticals had done enough to address agency concerns about its own anti-fat pill lorcaserin that they rated the stock a "buy."

PiperJaffray said the drug company is planning on resubmitting its application to the FDA, and with an apparent new regulatory environment in place, Arena's looks like the best, safest drug to make it through. There are certainly a host of caveats in there, and the Fool's Brian Orelli isn't so sure things are really so different at the agency, but 92% of the CAPS members rating Arena think it can still outperform the broad market averages. The caveat there is the low two-star rating they've assigned it, suggesting they also believe there are better places for your money.

So add Arena Pharmaceuticals to your watchlist and tell us on the Arena Pharmaceuticals CAPS page if you think it will be successful in its next go-around.

Shake, rattle, and roll
These three stocks shook the market this past month, but the Fool has found one company that's digging up massive profits and is likely to continue to do so if the markets become rattled. Roll on over to get your free copy, but hurry, because it's available only for a limited time.

Fool contributor Rich Duprey owns shares of Boston Scientific, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Medtronic. Motley Fool newsletter services have recommended buying shares of Stryker. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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