More Than Momentum: Stocks Rising for a Reason

Even on the market's worst days, buyout news or other short-term forces can send individual stocks up by 10%, 25%, even 50%. For example, when Transmeridian International offered $3 per share for public brethen Transmeridian Exploration (AMEX: TMY), the latter's stock jumped more than 40% in a single day.

But beyond one-time blips like this lie stocks with compelling reasons for their recent momentum -- provided you can find them. That's where Motley Fool CAPS comes in.

The story behind the story
CAPS is no crowd of lemmings; its best-performing investors' opinions do more to shape each company's rating than the picks of their poorer-performing peers. Let's use the collective wisdom of more than 80,000 CAPS investors to filter out the noise and find companies showing strong momentum. We'll screen for companies whose stock price is up at least 25% in the past month, with a market cap greater than $100 million and a beta of less than 3. That'll keep us clear of the wild, pump-and-dump land of penny stocks.

Here's a sampling of stocks our screen returned.

Let's sift further through this list of stocks that have thumped the market over the past month and find out why they've performed so well.

Battery backup
There's one macrotrend that has little chance of changing direction in the foreseeable future: The world is becoming more and more mobile. There's an increasing number of things that people expect to follow them as they move around, and all those things need batteries to keep them running. Ultralife Batteries develops customized batteries, along with the electronic and software smarts to power a wide range of mobile devices and applications.

Much like the Christmas present Ultralife got three years ago, a few large orders for advanced battery systems in military communication applications has shares all charged up lately. The orders promise more than $100 million in revenue to Ultralife, a significant boost to the $130.9 million in sales for the trailing 12 months at the firm. With the new business, the company now sees revenue in excess of $230 million for 2008.

With its more specialized focus on battery technology and systems, many investors believe Ultralife can stay above competition from low-cost producers such as China BAK Battery (Nasdaq: CBAK) while benefiting from some of the same macrotrends lifting both of them. Indeed, 95% of CAPS All-Stars who rated the stock see the company beating the S&P going forward.

Gas power
Another company riding the momentum of significant new business is oilfield services company Superior Energy. The firm announced a $750 million contract last week that will have the company decommission seven platforms off the Louisiana coast for BP (NYSE: BP), Chevron (NYSE: CVX), and Apache Corp., work that it believes will take three years. Considering that this is more than the company's total 2005 revenue, the new business has management and investors simply gushing.

Servicing the booming oil and gas industry, as well as having interests in petroleum properties itself, has made Superior live up to its name as an investment lately. The company has been diversifying its operations base over the last few years -- a move that has helped it continue impressive growth. And investors in CAPS largely believe the growth will continue, as 605 of the 608 investors rating the company believe it will outperform the general market in the future.

Ultimately, the only story that counts is your own. So what's yours? Whether you buy the tale of a soaring or a souring stock, your own research is more important than collective opinions. But these collective opinions make an individual's due diligence easier.

Step right up and add your own take on these -- or any of the more than 5,300 stocks that investors have covered in Motley Fool CAPS. It's totally free to be a part of the service, and the payback is more than worth it.