5 Stocks Bucking the Downtrend

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, shares in Electro-Optical Sciences rose 19% last week, boosted by a Barron's article laying out a case for the potential if the company's cancer-screening device gets approval from the Food and Drug Administration.

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 140,000 CAPS members to filter out the noise and find companies offering strong momentum.

We'll use 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. Below is a sample of stocks that our screen returned. If you'd like, run this screen yourself -- just keep in mind that results may change as the market does.

Company

CAPS Rating
(Out of 5)

4-Week
Price Change

Caraco Pharmaceutical Laboratories

*****

41.5%

McMoRan Exploration (NYSE: MMR  )

*****

34.6%

Clean Energy Fuels (Nasdaq: CLNE  )

****

38.3%

Headwaters (NYSE: HW  )

***

31.6%

Rentech (NYSE: RTK  )

**

320.8%

Source: Motley Fool CAPS. Price return from July 31 through Aug. 27.

Everybody loves gas
Clean Energy Fuels provides natural gas to vehicle fleets in the U.S. and Canada. Some CAPS members believe Clean Energy Fuels will benefit from the trend of using natural gas as an alternative fuel and see it working its way into more vehicles. And it's likely to happen -- natural gas is getting more attention in Congress these days, with the NAT GAS Act and its counterpart bill in the Senate focused on natural gas vehicles. The bills propose tax credits for new cars, trucks, and filling stations that use natural gas. Although lower natural gas prices hurt Clean Energy Fuels' second-quarter revenue, the decline was offset by the lower cost of sales, which ultimately helped boost the company's gross margin from the year-ago period. Clean Energy Fuels experienced increasing volumes and margins compared with the previous quarter and year over year, and said it pulled in new contracts in several important markets.

During the quarter, Clean Energy Fuels acquired the natural-gas vehicles operation of Exterran Energy Solutions, adding four large transit fleets to its customer list. The new customers have about 15,000 buses in major U.S. markets and use about 25 million gallons per year. Investors are also bullish on the company's expansion -- it has about 25 projects (mostly fueling stations) under construction and about 80 projects in its backlog, about double what it had last year. The company is focusing on volume growth to further drive business. In CAPS, 97% of the 860 members rating Clean Energy Fuels expect it to beat the market.

Synthetic take-off?
Nearly a third of CAPS All-Stars rating alternative-fuels company Rentech give it a thumbs-down. Nevertheless, the company has had a huge month after posting its first-ever profitable quarter and reaching a big milestone when its synthetic jet fuel was certified for commercial aviation. It also picked up some key deals to sell its fuel, including a multiyear one to sell up to 1.5 million gallons per year to eight companies, including United Airlines (Nasdaq: UAUA  ) , Delta Air Lines (NYSE: DAL  ) , and UPS (NYSE: UPS  ) . The fuel will be used for ground-service equipment operations at Los Angeles International Airport. Rentech also landed a deal with the U.S. military for a fuel to be used in a special military vehicle. The recent developments have sent shares up. Some investors are anticipating more growth potential, but it's not unanimous -- only 86% of the 317 CAPS members rating Rentech expect it to outperform the market.

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 opinions can make your due diligence a whole lot easier.

Add your take on these or any of the 5,300 stocks that our 140,000-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.

Always looking ahead, the Motley Fool Rule Breakers service has recommended dozens of companies working to change the way the world works -- and profit from it. To see what stocks David Gardner is picking today, take a free 30-day trial.

United Parcel Service is a Motley Fool Income Investor pick. Fool contributor Dave Mock has his own story, but there's no "happily ever after" at the end of it. He doesn't own shares of the companies mentioned here. The Fool's disclosure policy has the momentum of a freight train, but can stop on a dime.


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