Whether in the corporate lunchroom, your cubicle, or the local watering hole after work, there are regular places we gather to discuss news, sports or -- if you're like us -- stocks. Here at Motley Fool CAPS, we gather around the virtual water cooler daily to rate stocks and delve into their merits as investments.

Our 130,000-strong CAPS community -- where members give the thumbs-up or thumbs-down to some 5,300 stocks -- has earned its points by seeking out the businesses it thinks will outperform the market. Below we'll examine some of the highest-rated, most talked-about stocks in the CAPS universe, and whether you think they'll continue their winning ways.

Stock

CAPS Rating (5 Stars Max)

No. of Calls

% Outperform Calls

American Eagle Outfitters (NYSE:AEO)

****

2708

94%

BHP Billiton (NYSE:BHP)

****

2627

97%

Dawson Geophysical (NASDAQ:DWSN)

*****

2702

98%

Montpelier Re (NYSE:MRH)

*****

2596

96%

Netgear (NASDAQ:NTGR)

*****

2551

97%

A tall drink of water
Retail has been an unhappy sector for quite awhile. When even your most successful ideas post results described as "not as bad as expected," you know things are rough. While "less bad" could merely signify the calm before the storm, it's also possible that "better" could be right around the corner.

As we approach the 17th month of this official recession, it's not unlikely that we'll soon witness businesses posting the better results we've been hoping for. So when American Eagle Outfitters reported February same-store sales falling 7% -- a result it called "not as bad as expected" -- it may have suggested that retail's finally hit bottom.

Of course, not everyone will emerge from the recession at the same pace. Some might not come out at all. Linens 'n' Things succumbed, as did Circuit City. Others, like Dillard's (NYSE:DDS) and BonTon Stores, are on a deathwatch. But those firms aren't just suffering because of the economy; they're also paying the price for years of unwise management. That's a hopeful sign for American Eagle, which continues to operate without any long-term debt.

The company reported earnings of $32 million, or $0.16 per share, compared to a year-ago $140 million, or $0.66 per share. That was also less than expected, but hopeful signs abound. After a disappointing holiday season for most retailers, American Eagle reported that its promotional activity -- such as selling its jeans for less than $30 -- was a success. That will cut into margins, but it also allowed the company to clear out inventory. The teen retailer remains a profitable, financially stable business.

Still, teens are not necessarily moved as much by price as by fashion, which is why Aeropostale (NYSE:ARO) has been something of a recessionary fashion statement. Like a mallrat in tune with the latest trends, American Eagle would do well to emulate Aeropostale's style. Better February sales and a few rivals bucking the drumbeat of negativity could mean we see better results going forward.

The CAPS community remains solidly behind American Eagle. While 94% of the members that rate the company think it will outperform the market, 92% of the All-Stars are similarly confident. Even Wall Street is on board, with 21 of the 22 analysts giving it a thumbs-up.

Of course, not everyone's convinced. CAPS member Cellarhold, for example, thinks American Eagle's loss of fashion sense has clipped its wings:

Retail is hurting big time. My kids shopped here for years and this company has lost some of its appeal. Not many kids in their stores anymore from my observation. Time to check out!

aquabat63 disagrees, believing the Eagle still has a knockout combination of style and price:

No long term debt. Kids and parents both love this store as it combines fashion and trendiness with reasonable prices. Prices were hammered after bad Nov. and Dec. sales, but that was to be expected. I like it.

Gather 'round
Diving headfirst into the CAPS community is like trying to take a sip from a fire hose. With so many good opinions about today's top companies, why not grab a pointy paper cup from the dispenser and join us at the Motley Fool CAPS water cooler, where your input can help guide other investors to stocks with bright prospects for growth? Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page.

Sign up today for the completely free service, and let us hear what you have to say about the great and almost-great companies that interest you.

Dawson Geophysical and Montpelier Re Holdings are Motley Fool Hidden Gems recommendations. Montpelier Re Holdings and Netgear are Motley Fool Stock Advisor picks. The Fool owns shares of Dawson Geophysical. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.