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 Wells Fargo
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 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 35% 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 the results will change as the market does.
|
Company |
CAPS Rating
|
4-Week |
|---|---|---|
|
Aluminum Corp. of China |
***** |
40.8% |
|
Alcoa |
**** |
54.5% |
|
Dow Chemical |
**** |
44.7% |
|
DuPont |
**** |
35.9% |
|
State Street |
** |
60.3% |
Source: Motley Fool CAPS. Return from March 13 through April 9.
Alcoa
Aluminum producer Alcoa kicked off earnings season with weak results, but that was to be expected: The entire industry has fallen victim to weak demand across multiple markets, including automotive and construction. But the company maintains a strong cash position, is taking significant steps to trim costs, and is joining other producers like Rio Tinto in trying to positively influence the supply and demand balance with production cuts. Management also feels that the worst is over, and some investors think the company may be one of the first to break out in an economic recovery, especially with many nations devoting billions to infrastructure projects to spur their respective economies. As such, 93.2% of the 2,477 CAPS members rating Alcoa expect it to outperform the market.
Dow Chemical and DuPont
While demand for chemicals overall has dropped with the depressed economy, agricultural divisions have bucked the trend and held up well. Sales in the agricultural units of Dow Chemical, DuPont, and BASF all grew last year, even while companywide performance suffered. DuPont predicts strong agricultural profit growth over the next five years as farmers look for greater crop yields, making some CAPS members bullish on the stock at today's levels.
Beyond the recession, Dow Chemical is working feverishly to dig itself out from under the debt incurred in the $16.3 billion purchase of Rohm & Haas. After a Kuwaiti partnership went sour, the company issued $7 billion in preferred stock and borrowed $9.23 billion in short-term debt, which earned it a downgrade to just above junk status from Standard & Poor's. The company has quickly risen to the challenge, though, and sold off Rohm's Morton Salt unit for $1.68 billion to Germany's K&S AG, earning it a nice gain in share price. The Morton sale is the first step toward reducing the company's exposure to high-cost debt, a plan that may also include issuing new equity and debt.
And despite some investors' concerns, Dow still has confidence in the Middle East region, as plans for a petrochemical project with Suadi Aramco move forward. It is also still looking to revive a deal with Kuwait, a place where Fluor
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 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.
