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 Sun Microsystems (NASDAQ:JAVA) jumped nearly 79% when rumors arose that IBM might make the company an acquisition offer.

But beyond less-predictable events like that one lie stocks with fundamentally compelling reasons for their 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 130,000 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 greater than $100 million, and a beta of less than 3. Below is a sample of stocks that our screen returned. If you'd like, run this screen yourself -- just keep in mind that its results may change as the market does.

Source: Motley Fool CAPS. Price return from Feb. 27 through March 23.

Allied Irish Banks
In an eerie resemblance to the collapse of the U.S. mortgage market, bad loans in the U.K., Ireland, and other countries where Ireland's largest bank has subsidiaries have risen sharply, exposing it to significant bad debt write-offs and sending Allied's shares into a tailspin.  Roughly 11.7% of Allied Irish Banks' total book of loans still faces the risk of payment defaults, according to the company. Clearly, its situation is still getting worse.

But many investors expect Allied to be able to absorb bad loans, especially with help from the government's plan to invest billions in the bank to keep it viable. Ireland's finance minister recently stated his confidence in the bank as well. Most CAPS members echo that sentiment and remain confident in the company's survival. Indeed, 97.1% of the 2,156 CAPS members rating Allied Irish Banks expect it to outperform the market.

CME Group & IntercontinentalExchange
Financial exchanges CME Group and IntercontinentalExchange (ICE) both hope to put their dismal fourth quarters behind them. Some investors are taking the profit hits in stride, though, relishing the chance to buy more shares of these companies while the stocks are dirt cheap. While investors aren't necessarily questioning the survival of either exchange, the depth and duration of CME and ICE's profit cuts in the face of turbulent financial markets does raise some shareholders' concerns.

To recover as quickly as possible, each company is forging ahead with new growth opportunities. CME recently got the green light from regulators to launch its clearinghouse for credit derivatives with hedge fund partner Citadel Investments. It expects to begin trading and clearing credit default swaps (CDS) once it signs on major equity stakeholders.

But it's already behind ICE, which became the first to clear trades in the $28 trillion CDS market after it launched its own clearinghouse several weeks ago. ICE at least has major stakeholders such as Goldman Sachs and (NYSE:GS) and JPMorgan Chase on board, giving it an edge over CME.

Given the CDS market's large revenue potential, many CAPS members are looking longingly at both CME and ICE. In fact, 94% of the 770 members rating CME expect it to outperform the market, while a similar 94% of the 815 rating ICE think it will beat the market average, too.

And you?
What's your story? Whether you believe that a stock is soaring or souring, your own research is more important than others' collective opinions. Still, CAPS' insights can make your due diligence a whole lot easier.

Add your take on these or any of the more than 5,300 stocks that our 130,000-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.