4 Stocks Bucking the Downtrend

It may be difficult to believe, but even during these grim days of imploding balance sheets and government bailouts, there are still stocks moving up by 10%, 25%, or even 50%. For example, Secure Computing's stock surged 23% in a day when it was announced that McAfee would purchase the company for $465 million.

While many times price jumps come from buyouts or other less-predictable events, some companies have 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 115,000 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 20% in the past four weeks, a market cap of greater than $100 million, and a beta of less than 3.

Here's a sample of stocks our CAPS screen returned:

Source: Motley Fool CAPS. Price return from Sep. 5 through Oct. 3.

Still a monster
Canned beverage purveyor Hansen Natural recently reported another first -- its Monster Energy 16-ounce cans took the No. 1 slot in energy drink sales in the U.S., surpassing Red Bull’s 8-ounce cans. In a tough overall beverage market with Coca-Cola (NYSE:KO) and PepsiCo (NYSE:PEP) struggling to maintain volume, energy is still king as Monster sales volume increased 42.5% over last year, while Red Bull only grew 11.3%.

Despite the rapid growth in this segment, Hansen shares have been more than halved in the past year. Yet despite some investors' eagerness to sell in an economy with a gloomy outlook, there's still plenty of untapped market for energy drinks in the U.S. and overseas. Hansen just announced a long-rumored distribution agreement with Coca Cola and Coca Cola Enterprises to expand its reach across the U.S., Canada and Western European markets. This expansion will compliment its distribution already in place with Anheuser-Busch (NYSE:BUD) and place Monster drinks in more prominent retail locations.

Some CAPS members note the strong momentum Hansen is enjoying now as Monster is quickly becoming a highly-recognizable brand with marketing displays in almost any convenient store and even Wal-Mart Stores. Strong fundamentals coupled with growth opportunities have 93% of the 1,680 CAPS members rating Hansen Natural expecting the company to outperform the market.

Winning at a losers game
One of the few companies sidestepping the turmoil in the housing and credit markets, insurance and reinsurance holding company Fairfax Financial actually took advantage of the insanity by buying credit default swaps, predicting that many companies’ credit ratings would drop. So even while the economic environment has been tightening profits for other insurers such as Montpelier Re (NYSE:MRH) and Berkshire Hathaway’s (NYSE:BRK-A) insurance group, Fairfax's foresight has actually helped it profit significantly as the value of its swaps multiplied many times over in less than a year.

During the third quarter, Fairfax had realized cash proceeds of $574.5 million through the sale of its credit default swaps. Since 2007, it has achieved cumulative gains of $1.65 billion from CDSs and still has unrealized gains of more than $400 million. So while Bear Sterns and AIG were on the losing end of the credit default swap market, Fairfax was on the winning side.

Maybe the deft moves shouldn't be much of a surprise. Based in Canada, Fairfax has compounded its book value at a rate of more than 26% annually over the last 22 years. Fairfax is also looking to take advantage of opportunities in foreign markets, particularly European markets where it placed a recent tender offer of $72 million for all the outstanding shares of Polish reinsurer PTR. And more than 91% of the 301 CAPS members rating Fairfax Financial Holdings continue to be bullish on its prospects to outperform the market.

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 5,400 stocks that our 115,000-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.

On Oct. 7, 2008, Fool co-founder David Gardner and his Motley Fool Pro team will invest $1 million in a portfolio designed to help you make money in any market. In the coming weeks, the team, relying heavily on proprietary CAPS "community intelligence" data, will establish long and short positions in a broad range of securities, including common stocks, publicly traded put and call options, and exchange-traded funds (ETFs). To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.