More Than Momentum: Stocks Rising for a Reason

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, when United Technologies (NYSE: UTX) recently offered $2.63 billion for voting machine maker Diebold (NYSE: DBD), stock in the latter jumped more than 60% in a single day.

But beyond one-time blips like this are stocks with compelling reasons for recent momentum -- provided you can find them. That's where Motley Fool CAPS comes in.

The story behind the story
CAPS is no crowd of lemmings; its best-performing investors' 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 86,000 CAPS investors to filter out the noise and find companies showing strong momentum.

We'll screen for companies with a stock-price increase of at least 30% in the past month, a market cap of greater than $100 million, and a beta of less than 3. That'll keep us clear of the wild, pump-and-dump land of penny stocks.

Here's a sample of stocks our screen returned:

Let's burrow down through this list of stocks that have thumped the market in the past month and find out why they've performed so well.

Coming into focus
Camera-on-a-chip maker OmniVision Technologies has seen its stock zoom lately. Investors like the new picture they see with the company. The recent rise started right before the release of OmniVision's fiscal third-quarter report, which included a pretty nice increase in profitability as gross margins expanded to 27.1% on improved yield of its silicon image sensors. It also helped that CEO Shaw Hong glowed with confidence that the company would continue to grow revenue and take market share in the second half of calendar 2008.

But the new highs OmniVision experiences today are well below where the company was less than six months ago. The company has struggled to put together a business that consistently grows profitably for investors. OmniVision's dark reality is that its products become commodities fast, which generates fierce competition from many giant electronics manufacturers with better scale in their cost structure.

All this is supposed to change, however, when OmniVision releases its long-awaited TrueFocus sensors that correct focus instantly -- assuming it captures a time and performance advantage against competing solutions.

Even with margins trending down, many CAPS players say stock in OmniVision is underpriced considering its strong balance sheet and cash flow. In CAPS, the reduction in share price over the last several months has brought more bullish investors to OmniVision and bumped its ranking up to four stars. Today, 525 out of the 559 players rating the company say it will beat the S&P in the future.

Hi ho, silver (and gold)
With the spot price of gold reaching new highs on what seems a daily basis, it's little surprise to see stock in gold miners such as Gammon and Harmony surging lately. But Gammon Gold has given investors more than one reason to be bullish -- it released a positive progress report on its Ocampo mine operations for January. In that month, the company significantly improved operating cash flow at the mine, reducing expenses and more efficiently extracting gold and silver from the dig.

Even though the production output from the mine remains at the low end of the target, the reduction in cash costs and continued outlook for improvements in the operations heartened investors. Additionally, Gammon worked out a plan with creditors to open the remaining balance on a $60 million debt facility pending an updated reserve statement and mine plan.

The beaming report fended off an attack from short-sellers earlier in the year and has sent shares up more than 40%. CAPS investors generally favor Gammon's outlook as well, with 103 of the 120 investors who rated the company making bullish calls.

What's your story? Whether you buy the tale of a soaring or a souring stock, your own research is more important than collective opinions. But these collective opinions do make an individual's due diligence a whole lot easier.

Add your take on these or any of the 5,400 stocks our 86,000-plus investors cover in Motley Fool CAPS. It's totally free to be a part of the community, and the payback is more than worth it.