More Than Momentum: Stocks Rising for a Reason

Even on the market's worst days, headlines and ticker feeds tout soaring stocks. Some juicy rumor or biotech wonder drug seems to be reason enough for a stock to climb 10%, 25%, even 50% -- sometimes in a single day. Sometimes, the companies are familiar, but many are names and stories entirely unknown to investors.

Often, news of a buyout offer sends a stock rocketing. Even rumors and speculation can drive a stock through the roof, such as with mapping-data provider Navteq's rapid 44% rise in the two months leading up to Nokia's (NYSE:NOK) $8.1 billion cash offer for the company. But beyond these somewhat unpredictable surges, there are stocks out there with a fundamentally compelling story behind their recent momentum. The difficulty comes in sifting through the daily trading and news-driven gyrations to find them.

Luckily, there's help right at your fingertips. Motley Fool CAPS is a great tool not only for finding and screening stocks, but also for getting a quick read on the fundamental stories behind them.

The story behind the story
Let's dig right in, using the collective wisdom of more than 65,000 CAPS investors, to look past the splashy news and find companies showing strong recent momentum.

We'll screen for stocks showing at least 30% price appreciation in the past month. Then we'll weed out stocks with less than a $100 million market capitalization and those with a beta greater than 3. Setting these limits will help keep us out of the wild, pump-and-dump land of penny stocks.

Here, then, is a broad sampling of stocks that our screen returned today.

Now let's sift further through this list of stocks that have thumped the market over the past month and find out why they've performed so well.

The method behind the madness
CAPS contains a searchable record of investors' opinions and comments about a company, as well as an overall ranking from the investing community. Lest you think this sounds like following a crowd of lemmings, note that the opinions of the best-performing investors are weighed more heavily than are those from investors who haven't done so well. Thus, a company's ranking is influenced more strongly by investors who have already proved themselves better than the average dart-throwing monkey.

More China
A lot has already been said about the recent surge in shares of Chinese companies, but when you have the mammoth oil and gas firm PetroChina tacking on more than $80 billion (yes, that's billion) in market cap in a month, it approaches insanity. While CAPS investors still overwhelmingly favor the company, I'm more inclined to follow the lead of a certain Warren Buffett, who is trimming back his stake in the company.  

Ride the wild SiRF
Paddling its way into a nearly 40% gain in the past month, GPS-chip maker SiRF Technology has turned the tide, with a few analysts offering positive comments and an upgrade. Credit Suisse, for one, echoed what many CAPS investors have been saying: Sales of navigation devices that need GPS chips -- such as the devices made by Garmin (NASDAQ:GRMN) and TomTom -- are on a major growth trajectory. It cited an expected strong holiday sales season this year as consumers start buying more personal-navigation devices.

Credit Suisse also echoed an Oppenheimer view that SiRF may see significant sales in high-end phones from a potentially reinvigorated Motorola (NYSE:MOT). Before the analyst optimism, SiRF's stock had been slowly sinking below the surface; Bank of America had expressed concerns over competition threatening SiRF's dominant market share. Many CAPS investors like the company's long-term prospects, however, and were glad to see shares trading cheaper. In fact, few investors are betting against the Big Kahuna of GPS chips, with only four out of 114 CAPS All-Stars panning the company.

What's your story?
Ultimately, the only story that counts is your own. Whether you buy the story of a soaring or souring stock, your own research is more important than collective opinions. But thankfully, these collective opinions make an individual's job of due diligence much easier.

So step right up and chime in with your own take on these or any of the more than 5,000 stocks that investors have covered in Motley Fool CAPS. It's totally free to be a part of this story, and the payback is more than worth it.