Even on the market's worst days, buyout news and other short-term forces can send individual stocks up by 10%, 25%, even 50%.
For example, commercial real estate services company CB Richard Ellis' good news about its rollout of a secondary public share offering was enough to boost shares by 43%.
But beyond less-predictable events like that one are stocks with fundamentally compelling reasons for recent momentum. The trick is to find those stocks. That's where Motley Fool CAPS comes in.
The story behind the story
CAPS is no crowd of lemmings. Its best-performing members' 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 120,000 CAPS members to filter out the noise and find companies offering strong momentum.
We've used CAPS' handy stock screening tool to quickly zero in on companies with a stock price increase of at least 30% in the past four weeks, a market cap of greater than $100 million, and a beta of less than 3.
Here's a sample of stocks our CAPS screen returned:
|
Company
|
CAPS Rating
(out of 5)
|
4-Week
Price Change
|
|
American Science & Engineering (Nasdaq: ASEI )
|
*****
|
30.4%
|
|
Archer-Daniels-Midland (NYSE: ADM )
|
****
|
41.5%
|
|
Sunoco (NYSE: SUN )
|
***
|
51%
|
Source: Motley Fool CAPS. Price return from Oct. 17 through Nov. 14.
Building a better mousetrap
American Science & Engineering has been building its backlog of orders for its security equipment with customers like the United Arab Emirates and the U.S. government. The backlogs are now turning into profits, as the company had a strong fiscal second quarter with revenue up 50% to $56.3 million and profits up 73% over last year. New bookings for the quarter continued to please, up 68% to $93.5 million, largely due to demand for its Z Backscatter Vans (ZBV) detection system.
As evidence of the growing popularity of ZBV, the U.S. government recently placed a $4.4 million order for the mobile X-ray screening systems after successfully using them at border crossings. Since the system is built into a van and allows for drive-by X-rays of suspect vehicles and objects, it provides a safe and discreet alternative for screening contraband.
AS&E also recently acquired certification that allows it some of the same immunities from liability for its products enjoyed by major government contractors like Lockheed Martin (NYSE: LMT ) or General Dynamics (NYSE: GD ) . Investors applauded the financial and operational developments and have accordingly bid shares up. In CAPS, more than 96% of the 959 members rating American Science & Engineering expect it to outperform the market.
Popping corn
Many CAPS members see Archer-Daniels-Midland in the right place at the right time, poised to take advantage of the long-term agricultural bull market. This is apparently evident already, as ADM posted strong fiscal full-year results. Sales rose 65% to $21.16 billion and net income more than doubled to $1.05 billion, from $441 million a year ago. Higher corn prices pushed profits down in the company’s corn-processing unit, but this was more than offset by its oilseeds processing unit, which realized higher selling prices and more than doubled segment profits.
ADM is looking ahead by joining companies like Monsanto (NYSE: MON ) and Petrobras (NYSE: PBR ) that are investing heavily in Brazil, which is one of the world leaders in ethanol fuel. To this end, the company just announced a $500 million joint venture with Cabrera to eventually produce 70 million to 90 million gallons of sugar-cane-based ethanol a year in Brazil.
ADM is also a consistent producer for its shareholders -- the company recently declared its 308th consecutive quarterly dividend, marking 77 years of uninterrupted dividends. With many long-term trends favoring the company, more than 93% of the 1,734 CAPS members rating Archer-Daniels-Midland's stock are bullish.
And you?
What's your story? Whether you buy the tale of a stock that's soaring or souring, your own research is more important than collective opinions. But these collective opinions can make your due diligence a whole lot easier.
Add your take on these or any of the nearly 5,400 stocks that our 120,000-plus members have covered in Motley Fool CAPS. It's totally free to be a part of the community, and the payback is more than worth it.
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