3 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, Hartford Financial's (NYSE:HIG) shares more than doubled when the company announced a better-than-expected forecast for 2008.

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 do the picks of their poorer-performing peers. Let's use the collective wisdom of more than 120,000 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.

Here's a sample of stocks our CAPS screen returned:

Source: Motley Fool CAPS. Price return from Nov. 7 through Dec. 5.

More power
Huaneng Power has been recovering from the hit that Chinese stocks have taken across the board. Millions in paper value have been vaporized at Huaneng and other favored names, such as Baidu.com (NASDAQ:BIDU) and SINA. Many investors have returned to Huaneng lately, though, because they see the power producer as a safer alternative to other big growth stories in China.

Huaneng does indeed have its strong points -- it has been capitalizing on China's growing population and is working on new nuclear technology to make cleaner energy and decrease costs. Both should be favorable trends in the long run, but some risks are still present. The company has reported GAAP losses and burned through more than $2.3 billion in cash this year, as rising coal prices and caps on electricity prices earlier this year hit operations hard. Whether commodity prices will ease or soar higher is under Huaneng's control about as much as the rates dictated by the government, so its profit margins in this volatile time are less predictable.

But government authorities have already attempted to curb power shortages and help energy companies like Huaneng and Huadian Power by bumping up tariffs on electricity for some users. Alternative-energy companies such as Yingli Green Energy (NYSE:YGE) and Huaneng both benefit from higher electricity prices, and many investors say it's unlikely that the government will regulate power providers into continuous losses. A large contingent of CAPS investors hold a positive outlook -- nearly 98% of the 923 members rating Huaneng Power International expect it to outperform the market.

More energy
Last month was a good time to get small-cap Vaalco Energy on the cheap after all. Shares have been recovering from the beating they took earlier this year, while peers Rowan (NYSE:RDC) and Nabors Industries (NYSE:NBR) continue to struggle. Vaalco's low debt and solid cash position give the company lots of flexibility to expand the business. And expanding it is, with its exploration program growing at a rapid rate and more development and exploration wells in the works.

Operations continue to perform well, too. After a solid second quarter that had a 130% increase in revenues, Vaalco pulled off a great third quarter, which brought a 150% increase in profits. It was able to sell almost 10% more oil at an average price of $107 during the quarter. This strong performance has been consistently generating good free cash flow for the company -- something investors like to see in a volatile market where "leverage" is a four-letter word. Sitting in its position of strength, Vaalco has 97% of 1,471 raters at CAPS feeling bullish.

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 nearly 5,400 stocks that our 120,000-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.