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, shares in CV Therapeutics jumped 31.5% when it was announced that Gilead Sciences (Nasdaq: GILD ) would purchase the company. Some investors had been anticipating a competing offer from Astellas, which has since withdrawn.
But beyond less-predictable events like that one lie stocks with fundamentally compelling reasons for their 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 130,000 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 15% in the past four weeks, a market cap of greater than $100 million, and a beta of less than 3. Below is a sample of stocks that our screen returned. If you'd like, run this screen yourself -- just keep in mind that results may change as the market does.
|
Company
|
CAPS Rating
(5 stars max.)
|
4-Week
Price Change
|
|
Smith & Wesson
|
****
|
83.8%
|
|
Suncor Energy (NYSE: SU )
|
****
|
29.4%
|
|
Garmin (Nasdaq: GRMN )
|
****
|
15%
|
Source: Motley Fool CAPS. Price return from Feb. 13 through March 13.
Sparing no expense
Even though low oil prices have put a damper on expensive oil sands and other unconventional production, such as oil shale projects, oil majors are still keeping the dream alive with long-term views of higher-priced oil. Suncor specializes in developing oil sands, and some investors are expressing renewed hope that long-term demand from emerging nations such as China and India will eventually pick up oil prices.
But many companies involved in more pricey developments don't have the economic luxury of conducting business as usual. A couple of months ago, joining Statoil Hydro (NYSE: STO ) and Canadian Natural Resources (NYSE: CNQ ) in cutting oil sands projects, Suncor announced significant reductions in capital spending for 2009. OPEC members are trying to stick to their agreed-upon cuts to influence prices higher without putting too much pressure on beleaguered consumers, but the International Energy Agency still forecasts a continued slump in demand, while inventories also fall. There are lots of moving pieces in the near-term picture for oil, but 96.2% of the 1,466 CAPS members rating Suncor Energy have shrugged off the current risks and see it outperforming the market in the future.
Less is more
While PC makers Dell (Nasdaq: DELL ) and Acer are eyeing the smartphone market, and Palm races to launch its Hail Mary device called the Pre, GPS device maker Garmin faces a crowded entrance into a very competitive smartphone market, with its plan for a Google (Nasdaq: GOOG ) Android-based handset that includes its well-developed navigation tools. But although investors still divided on how well the new device will perform, Garmin has impressed the market with the wares it already sells today.
Despite Garmin's drop in fourth-quarter sales and earnings, the big news in its recent earnings release was that it managed to reduce its previously rising inventories, which ended down 16% by the end of 2008. Gross margins did suffer in the process, but the company still shipped 15% more units in the quarter than it did last year and picked up market share around the globe. With these improvements, Garmin turned in 41% higher free cash flow for the year, to come in at $743 million.
After a large drop in share price over the past year, more than a few CAPS members are bullish on its cheap price and like its nearly $700 million cash balance with no debt -- a position that places it in a better spot than debt-laden rival TomTom after its pricey acquisition of Tele Atlas. At this point, 94.3% of the 5,417 CAPS members rating Garmin expect it to outperform the market.
And you?
What's your story? Whether you buy the tale of a stock that's soaring or of one that's 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 more than 5,300 stocks that our 130,000-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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