5 Stocks Bucking the Downtrend

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 American Bancorp of New Jersey jumped 27% last week on the news that it was being purchased by Investors Bancorp.

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 125,000 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 30% 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 our CAPS screen returned. If you want to run this screen yourself, simply click here -- just keep in mind that results will be updated with the market.

Source: Motley Fool CAPS. Price change from Nov. 21 through Dec. 19.

Pardon our dust
The construction sector had been hit hard by the downturn and is suffering one of the highest unemployment rates. But many investors anticipate the mother of all bailouts for construction and engineering company Foster Wheeler and others like Caterpillar (NYSE:CAT) because president-elect Obama's administration has indicated it wants to spend big money on infrastructure projects to help rejuvenate the economy. In addition to renewed hope for stateside building, Foster Wheeler is also benefiting from international contracts with its recent award to work with KBR (NYSE:KBR) in a $20 billion upgrade of Saudi Arabia's largest refinery.

It's also joining Transocean in moving its place of incorporation to Switzerland to be more centrally located for its international operations. This approach to focusing on streamlined operations makes the company one of the most efficient on the planet, with a 53.1% return on equity. Standard & Poor's also noted Foster Wheeler's strong cash flow and solid backlog of $7 billion when it recently upgraded the company's credit rating. With its solid fundamentals, more than 97% of the 1,531 CAPS members rating Foster Wheeler expect it to outperform the market.

Rolling downhill
GM and Chrysler got their $17.4 billion bailout from the Bush administration to keep them afloat for awhile, but there are still many more auto industry decisions that will be left to Obama. Investors see Ford in a better financial position than GM and Chrysler because it wasn't immediately seeking aid. Still, Ford plans to close nine of its 15 factories the first week of January to save some money while even Japanese automakers like Toyota (NYSE:TM) and Honda are dealing with declining sales.                                  

Ford still wants a $9 billion credit line from the government in case it needs it, but unlike the others, it still has cash and about $10 billion in existing credit lines available to it. The company is also cutting capital spending and laying off some workers to slow down its cash-burn rate. The cash cushion gives Ford more time and flexibility in aligning its operations with the market, and gives investors more optimism that the company will outlast the downturn.

Many CAPS members remain bearish on the company and the auto industry as a whole, but some believe stock prices can't go much lower and are poised to turn around. Today, only 61% of the 6,174 CAPS members rating Ford see the company beating the broader 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 nearly 5,400 stocks that our 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.

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