5 Stocks Breaking Out

Volatile markets seem to be the norm these days, as stocks gyrate through ups and downs on a daily basis. But sometimes, buyout news and other short-term forces can send individual stocks soaring by 10%, 25%, even 50% -- even on the market's worst days.        

For example, shares of Terra Industries (NYSE:TRA) soared 22% after Norway's Yara International agreed to buy the company for $4.1 billion in cash.      

But beyond less-predictable events like that one are stocks with fundamentally compelling reasons behind a big move. 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. Here's an example of how we can use the collective wisdom of more than 150,000 CAPS members to filter out the noise and find companies with strong potential.

We'll use CAPS' handy stock screening tool to quickly zero in on companies with a stock price increase of at least 20% in the past four weeks, a market cap of greater than $100 million, and a beta of less than 3. Then we can use the insight of the CAPS investment community to add some context to these market movers.

Source: Motley Fool CAPS. Price return from Jan. 22 through Feb. 19.

Cliffs Natural Resources
Many investors like Cliffs Natural Resources' moves to strengthen its position in the mining industry, aiming to benefit from an eventual recovery in world steel markets. It recently closed the acquisition of Freewest Resources Canada, which lands it some high-grade chromite deposits and will help expand its customer base. And the purchase of the remaining interest in Wabush Mines from divisions of U.S. Steel and ArcelorMittal (NYSE:MT) adds 50 million tons of iron ore reserves and 4 million tons of additional iron ore pellet production capacity. Despite a weaker pricing environment, Cliffs recently reported that it doubled its fourth-quarter earnings from a year ago, blowing past Wall Street's estimates. With Cliffs growing its arsenal of natural resources capabilities, CAPS members foresee good long-term potential for the stock. As such, 96% of the 1,106 CAPS members rating Cliffs Natural Resources expect it to outperform the broader market.

Baidu
Google has had its share of woes in China lately, and Sohu.com (NASDAQ:SOHU) reported weakness in its fourth-quarter earnings. Meanwhile, Baidu's been capitalizing on its position as China's search engine leader, generating solid fourth-quarter revenue and earnings growth. Continuing their steady climb since early last year, Baidu's American depositary shares recently reached all-time highs, surging beyond $500 per share. With the number of Internet users in China growing quickly, and Baidu's share of the Chinese search market sitting far ahead of rivals, the company expects even more growth in the first quarter. Many CAPS members remain bullish on the future growth potential of China's Internet, but more are noting the premium that shares are commanding lately. When comparing Baidu bulls to bears in CAPS, 84% of the 3,720 members rating Baidu 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 collective opinions can make your due diligence a whole lot easier.

Add your take on these or any of the 5,400 stocks that our 150,000-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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