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3 Stocks Shaking the Market

http://www.fool.com/investing/general/2010/06/25/3-stocks-shaking-the-market.aspx

Rich Duprey
June 25, 2010

Some stocks are one-hit wonders, making a big splash when they first appear, then quickly fizzling into obscurity or oblivion. But for other stocks, that initial big move is only a preview of even bigger and better gains.

Today, we're listing three stocks that made some of the biggest moves up over the past month and we'll pair them with the ratings issued by our Motley Fool CAPS community. The higher each stock's rating, the greater CAPS members' faith in that company's ability to keep on beating the market.

Company

1-Month % Change

CAPS Rating
(out of 5)

MELA Sciences (Nasdaq: MELA  )

46.7%

***

American Apparel

44.1%

**

US Gold (NYSE: UXG  )

37.5%

***

One-month % change from May 25 to June 24.

While the markets whipsaw to changes in consumer sentiment, the S&P 500 was essentially flat over this time. So before we get shaken out again, let's see why some members of the CAPS community think two of these companies might continue to outperform.

A mighty temblor
After one false start, and with a decision looming in August about its handheld device for discovering melanomas, MELA Sciences has the opportunity to finally make some money and become a major growth company. While there's no direct competitor with a similar device on the market -- potentially giving the company a clear field should the Food and Drug Administration approve it -- optical imaging is a pretty broad industry. General Electric (NYSE: GE  ) and Raytheon (NYSE: RTN  ) are large, well-funded potential rivals that can use their expertise to knock MELA Sciences back (or acquire it, one would imagine).

One other risk I see here is that the detection of melanomas is based on a proprietary database of pigmented skin lesions. When the MelaFind device is used, it emits light waves to capture images of suspected lesions, and a sophisticated algorithm trained on MELA's database analyzes the images to provide information on whether a biopsy is needed.

While there's always the potential for false positives, phase 3 clinical trials last year showed the MelaFind to be incredibly accurate. Yet the device is only as good as the database. MELA Sciences says its database is the largest in the U.S., but plenty of other businesses found it was possible to pierce their shields even though they had sophisticated, proprietary databases.

Student loan guarantor First Marblehead (NYSE: FMD  ) , for example, was brought to its knees when The Educational Resources Institute (TERI) filed for bankruptcy protection after its 20-year database on how student loans performed broke down. First Marblehead lost 96% of its value. CompuCredit (Nasdaq: CCRT  ) , which provides branded credit cards to consumers with low FICO scores (scale 300 to 850), also had a proprietary database designed to keep defaults low, but its stock has fallen more than