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 of ChinaBAK Battery (NASDAQ:CBAK) shot up 63% last Tuesday on rumors that it would supply batteries for Google's upcoming smartphone, only to fall 24% the next day when the company's CFO dispelled the rumors.

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 145,000 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 25% in the past four weeks, a market cap of greater than $100 million, and a beta of less than 3.

Source: Motley Fool CAPS. Price return from Dec. 4 through Dec. 31.

Take-Two Interactive
Investors didn't show much sympathy for video game publisher Take-Two when it offered a weak outlook last month that forecast upcoming losses -- a huge drop in share price followed the announcement, wiping out nearly a third of the company's value. But while the company followed through with a weak fiscal fourth-quarter earnings report, news that activist investor Carl Icahn has taken an 11% interest in the company sparked some renewed optimism. Some investors have found some consolation that Icahn, who has also tried to weigh his influence on companies like Yahoo! (NASDAQ:YHOO) in the past, thinks shares of Take-Two are undervalued. The failed buyout offer by Electronic Arts (NASDAQ:ERTS) last year has some investors speculating that Icahn may try to rekindle some buyout interest and push for a sale of the company.

Icahn better be able to work some serious magic, though, as the company recently again cut its full-year guidance after announcing that it will sell its All Games distribution arm, and now expects a steeper loss and lower revenue. While the fundamentals crumble and a potential white knight is moving in from the sidelines, 92% of the 1,139 CAPS members rating Take-Two still expect it to outperform the market.

SanDisk
It was a solid month in December for flash memory maker SanDisk, which saw big gains in share price as more analysts talked glowingly about its future, particularly trends working in its favor in 2010. An upgrade from ThinkEquity looks for stronger NAND pricing trends, and other investors see additional factors that could help the company have a strong year in 2010, like the growth of memory-hungry devices. Growing smartphone shipments are expected this year, with companies like Apple (NASDAQ:AAPL) and Research In Motion competing aggressively for market share. Google is looking to make another splash this year and push its Android operating system into new devices as well.

Collectively, the drive to offer a plethora of new compact tech devices in turn creates immense future potential for solid-state drives and offers long-term growth prospects for memory makers. Despite the recent optimism, SanDisk still sits at a middle-of-the-road three-star rating in CAPS, with some members cautious after its recent run-up in price. When looking at the numbers, 91% of the 1,763 members rating SanDisk in CAPS expect it to beat the broader 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 collective opinions can make your due diligence a whole lot easier.

Add your take on these or any of the 5,300 stocks that our 145,000-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.