5 Stocks Springing Back

• Email
• Share
• Print

With all the volatility in the markets today, there's no shortage of market seers attempting to call a bottom. Bernanke called a bottom not once, but twice. Heck, even Keanu Reeves laid out what a world-ending market bottom looks like.

And investors should be buying near the bottom, when pessimism has unduly beat good companies down to great prices. That's why we here at the Fool -- and 135,000 investors like us -- look to the Motley Fool CAPS community to help sniff out the real opportunities from languishing companies.

Real bottom or another leg down?                                
Of course, there's no foolproof method of calling a market bottom. But CAPS has a great balance of both quantitative and qualitative resources available on 5,300 stocks, and even a nifty stock screening tool to help investors quickly zero in on potential investment opportunities. Then we can use all the information in CAPS to test whether an individual company has already seen its bottom valuation, or has just primed shareholders for further pain.

I've used the CAPS screener to filter out $100-million-plus companies that have seen their stock price appreciate by at least 20% in the past 13 weeks even while they remain at least 50% below their 52-week high. These stocks also have both a positive return on equity and earnings per share over the last 12 months; this limits the results to companies that have a history of delivering results regardless of stock gyrations. 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)	13-Week Price Change	% Below 52-Week High
Chicago Bridge & Iron (NYSE: CBI)	*****	21.5%	51%
CryoLife	****	69.7%	52.2%
Kansas City Southern	****	40.5%	57.5%
First American	***	36%	53%
CBL & Associates Properties (NYSE: CBL)	*	31.1%	64.9%

Source: Motley Fool CAPS. Price return from May 29 through August 24.

The bottom case
I see several reasons why Chicago Bridge & Iron may be looking nowhere but up today. The engineering and construction company works on all different types of energy projects around the world, supporting many of the major oil and gas producers such as ExxonMobil (NYSE: XOM), Valero (NYSE: VLO), and Chevron (NYSE: CVX). Many CAPS members believe the company will resurge when the energy industry once again boosts its construction project activity. Reasons for optimism include a recently announced $530 million award from Abu Dhabi Gas Industries. Also, one analyst says there's also a likelihood of scoring a $1 billion-plus contract later this year from Refineria de Cartagena SA. On top of the potential prospects for new business, the company's earnings multiple looks cheaper today than that of many of its peers.

Or dead cat in disguise?
Though Chicago Bridge & Iron looks as though it may be a tightly wound spring, the company still has its share of issues, not all of which are within its control. The firm booked $1.1 billion fewer awards in the second quarter compared to last year, and backlog at the end of the quarter sat at $4.2 billion compared to $5.7 billion at the beginning of the year. Revenue also fell 15% in the quarter as lower energy prices hampered some of Chicago Bridge and & Iron's primary customers, and difficult financing makes it a tough environment for securing large-scale projects. Some CAPS members also favor more diversified players that hold leading positions in global engineering and construction like Fluor (NYSE: FLR) or Foster Wheeler (Nasdaq: FWLT), who has recently reported its backlog and margins increasing.

What's your call?
Overall, nearly 98% of the 1,300 CAPS members rating Chicago Bridge & Iron are bullish and see it outperforming the broader market. For my part, I think the macroeconomic conditions make the company attractive. But I have to agree with many others that a few peers are even more enticing, even given the higher multiples at which they trade.

But what ultimately counts is your own opinion -- CAPS is just there to help you form it. The best part is that the Motley Fool CAPS database is all free, and you can even add your own insight on any of the 5,300 stocks that our 135,000-plus members have covered -- whether it's related to expired felines or not.