Hot Stocks You're Buying Now

Welcome back to another Foolish review of the hottest stocks as ranked by Motley Fool CAPS. We're looking at the three best-performing industries over the past 30 days and your favorite long and short candidates in each.

Last time, we saw that multimedia-software makers were burning hotter than Carrot Top with a sunburn. Well, get out the SPF 45, my friend, because the sun is still shining on these stocks, which are, as a group, up 28.8% over the past 30 days.

Last week's second-place finisher -- molecular diagnostics specialists -- still aren't close, but Luminex (Nasdaq: LMNX  ) and its peers are up a very respectable 12.7% since the closing days of December.

This week's third-place finisher is a new entrant: generic-drug makers, including market heavy Mylan Labs (NYSE: MYL  ) . These princes of America's vast and growing pharmaceutical empire are up an average of 12.6%.

According to you, our Foolish readers, the best stocks in these industries to own now -- i.e., those with four or five of the maximum five stars in CAPS -- are:

Company

CAPS Stars

No. of CAPS Ratings

Bull Ratio

30-Day Price Change

GigaMedia

*****

1,524

98.2%

(18.9%)

Caraco Pharmaceutical (AMEX:CPD)

*****

53

98.0%

11.9%

Activision

*****

1,464

97.3%

0.4%

Barr Pharmaceuticals (NYSE:BRL)

*****

778

96.0%

1.8%

Teva Pharmaceutical (NASDAQ:TEVA)

*****

803

96.0%

  9.2%

Moldflow (NASDAQ:MFLO)

*****

22

95.7%

(20.4%)

Sources: Motley Fool CAPS, Yahoo! Finance.

And your favorite short candidates -- i.e., those rated with one or two stars in CAPS -- are:

Company

CAPS Stars

No. of CAPS Ratings

Bear Ratio

30-Day Price Change

Convera

*

88

82.9%

(5.9%)

Renaissance Learning (NASDAQ:RLRN)

*

28

78.6%

(12.8%)

Sources: Motley Fool CAPS, Yahoo! Finance.

Caraco intrigues me because of its enthusiastic following. CAPS investor NeroSagetrade, for example, said in October that the valuation doesn't do justice to the firm's stellar fundamentals: "Just four years ago [Caraco was] a nothing, a blip on the generic radar screen, and now they are returning 38-43% in revenue growth per quarter while running up [earnings per share] like mad. They are trading at a mere 14 times forward earnings based on my best guesstimation, have 35 generics in the books, and look to be working on another 19."

CntrlSrcutinizer, meanwhile, appreciates Caraco's business model in this pitch from last November:

They're not out to produce any new drugs. Instead, they control costs better than anyone and pick and choose which generic drugs they want to make, from the many fine drugs whose patents are expiring soon. (It's like reliving the early days of the pharma boom, 18 years later.) They are highly automated, get their active ingredients from a parent company in India, and have set up shop in Detroit -- the cheap-manufacturing-space, low-overhead capital of North America.

I'll add that Caraco's returns on capital are more than double that of Mylan, which trades for nearly 25 times its projected 2008 earnings. That's nearly double NeroSagetrade's guesstimate for better-performing peer Caraco. Fair? No, I don't think so.

But that's my take. What's yours? Would you buy Caraco Pharmaceutical at today's prices? Let us know what you think by signing up for CAPS today. It's 100% free to participate.

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