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 Sunrise Senior Living jumped 66% last Wednesday after the company reached a settlement agreement with health care real estate investment trust HCP that lands it a total of $50 million and ends litigation between the two.                                 

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 15% in the past four weeks, a market cap of greater than $100 million, and a beta of less than three. Then we can use the insight of the CAPS investment community to add some context to these market movers.

Company

CAPS Rating
(out of 5)

4-Week
Price Change

Exelixis (Nasdaq: EXEL  )

*****

23%

RF Micro Devices (Nasdaq: RFMD  )

****

23.4%

salesforce.com (NYSE: CRM  )

*

16.9%

Source: Motley Fool CAPS. Price return from Aug. 6 through Sept. 3.

Exelixis
Despite the double whammy of losing its CEO and its partner Bristol-Myers Squibb (NYSE: BMY  ) on its late-stage XL184 compound, Exelixis' shares have earned a little love from the market lately. The development stage company pulled in increased second-quarter revenues from collaborations with sanofi-aventis (NYSE: SNY  ) and Bristol-Myers Squibb, and several insiders have been buying shares near their 52-week low. CAPS members acknowledge the risks involved with investing in a development stage drug company, but also see significant upside potential with XL184 and the rest of its pipeline. In all, about 97% of the 2,543 CAPS members rating Exelixis expect it to outpace the broader market.

RF Micro Devices
Many CAPS members think RF Micro Devices is in a good position to reap the benefits of the growth in wireless devices and services. The company has been growing earnings in recent quarters and generated 29% revenue growth in its fiscal first quarter. And to the relief of many investors, a big part of that sales growth has come from customers other than its largest customer Nokia (NYSE: NOK  ) , which accounted for about 55% of its total fiscal 2010 revenue. Shares have recovered after taking a hit from an analyst downgrade, and CAPS members see its broader customer base and strong free cash flow generation as a big plus going forward. Out of the 704 CAPS members rating RF Micro Devices, 94% of those expect it to beat the market averages.         

Salesforce.com
Salesforce.com's shares have more than doubled in the past year thanks to the growth in interest in cloud computing services. And the stock was pushed even higher after the company's recent quarterly results and increased full-year revenue outlook. Despite the stellar performance, some CAPS members remain concerned about competition from bigger players like Oracle (Nasdaq: ORCL  ) , which has been making moves of its own in the space. With an earnings multiple that's through the clouds, CAPS members rate the stock one star in CAPS with only 55% of the 1,329 members rating the company seeing it as 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.

The Motley Fool Stock Advisor service looks for companies with strong management poised to beat the market over the long haul. To see all the stocks that have helped Tom and David Gardner beat the market by 65 points on average, take a free 30-day trial.

Fool contributor Dave Mock has his own story, but there's no "happily ever after" at the end of it. He owns no shares of companies mentioned here. Nokia is an Inside Value pick. Salesforce and Exelixis are Rule Breakers recommendations. The Fool owns shares of Exelixis and Oracle.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Fool's disclosure policy has the momentum of a freight train, but can stop on a dime.


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