3 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 beaten down power generator Dynegy jumped 63% on Friday after it said it agreed to be taken private by Blackstone Group for $542.7 million plus the assumption of more than $4 billion in debt.               

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 165,000 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 July 16 through Aug. 13.

ATP
ATP Oil & Gas does much of its business in the Gulf of Mexico, among the number of companies affected by the drilling moratorium there. Offshore driller Noble (NYSE: NE) and oil giant Royal Dutch Shell (NYSE: RDS-A) both saw significant financial affects in the second quarter related to the moratorium. ATP was hammered as well and recorded costs of its own in the most recent quarter, including an $8.7 million charge due to the drilling halt at one of its locations. But the vast majority of CAPS members rating ATP remain bullish and some members have recently spoken out about the tremendous bargain they see in the shares. Close to 97% of the 1,214 CAPS members rating ATP Oil & Gas expect it to outperform the broader market.   

AXT
AXT's shares have already been on a big run over the past year and investors got another treat with its 77% jump in second-quarter revenue. Its net income also ballooned, jumping from a loss to a profit of $5.5 million as wireless markets and demand for LED technology continues to grow. The semiconductor substrate producer is taking advantage of rising demand for its materials and has proven deft at profiting from the current tech boom. Some top-performing CAPS members have now switched sides after the stock soared, sending the stock's rating down from five to three stars, but a large majority -- 97% of the 358 members rating AXT -- remain bullish.

LDK Solar
LDK Solar joined Chinese solar peer JA Solar (Nasdaq: JASO) as well as a couple of top German solar players in giving a bright outlook for the rest of the year after reporting solid second-quarter results. Strong demand helped LDK more than double its sales over last year's quarter. Not everyone in the sector is thinking good times are here to stay, though -- SunPower's (Nasdaq: SPWRA) CEO issued some words of caution, since he believes added capacity is starting to catch up with demand. In the meantime, though, LDK has boosted wafer capacity, and it expects to deliver another increase in module shipments for the third quarter. In CAPS, about 94% of the 1,438 members rating LDK Solar believe it's a market-beating investment.

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 165,000-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.