Top-Rated Stocks Blowing the Doors Off This Market

No one has perfect foresight, but let's be honest: The market is full of people who, as Oscar Wilde would say, know "the price of everything and the value of nothing." Far too often -- over the past year, especially -- investors have been pitched sensational stock recommendations, only to be left high and dry as shares crumble.  

I summoned our Motley Fool CAPS community to point out a few four- or five-star stocks that have gone gangbusters in recent months. While they're not formal buy recommendations, these three-month bloomers caught my attention: 

Data from Motley Fool CAPS and Yahoo! Finance as of April 12. 

You can rerun the CAPS screen I used by clicking here.

Still looking for signs of hope
Chesapeake Energy got slaughtered in 2008, as plunging natural gas prices threatened this company's debt-laden balance sheet. Thankfully, the company averted tragedy by:

• Reducing capital expenditures by at least $9.4 billion through 2010.
• Hedging 78% of 2009 natural gas production and 48% of 2010 production at prices of $7.71 and $9.02 per thousand cubic feet equivalent, respectively -- prices substantially higher than today's rate.

Natural gas prices remain stubbornly low, having failed to enjoy crude's recent rebound, but investors should keep the big picture in mind when judging Chesapeake's long-term prospects. As Foolish colleague David Lee Smith pointed out, natural gas's relevance could undergo a paradigm shift, should efforts by producers such as Chesapeake and Devon Energy (NYSE:DVN) to shift transportation's reliance on dirty, predominately imported fuels to natural gas become reality.

CAPS member HonestK shares a similar view, writing:

Huge new natural gas shale reservoirs are waiting to be exploited in the U.S. (the Barnett shale activity is so strong, the other big finds like the Fayetteville shale and Marcellus shale are still waiting for drilling rigs.) T.Boone Pickens is leading the charge for natural gas fueled transportation vehicles. The other alternatives such as fuel cells and electric batteries still have some major technological hurdles to overcome. Chesapeake will have the macroeconomic tradewinds at their backs for many years to come!

Another CAPS member, ayerskw, is on the same page:

Natural Gas is the common sense mid-term energy solution for North America until viable long term alternative energy solutions are fully developed and deployed. [Chesapeake] is the largest and most sophisticated player in the Natural Gas Market.

If oil prices remain low for the long haul, they could present a barrier to these dreams' fruition. Necessity is the key to innovation, and cheap gasoline is all but guaranteed to shelve alternative energy projects. But while this is fear is absolutely valid for the time being, the return of sky-high oil prices might not be as far off as you think.

Low oil prices have sparked dramatic cutbacks by oil producers. Oil giants such as ConocoPhillips (NYSE:COP) have replaced just a fraction of production as prices fell precipitously from last summer's high. As goes oil's profitability, so goes the incentive to search for it. That's how markets work.

Yet this drop in supply essentially guarantees a return to high oil prices, not only from increased demand once the economy rebounds, but also from equally dramatic supply shortage, should the industry prove unable to ramp up and meet that demand in time. Cheap oil's days are numbered, and that bodes well for natural gas giants like Chesapeake.

Your turn to chime in
What do you think about Chesapeake? More than 130,000 investors use CAPS to share ideas and swap opinions. Click here to check it out and speak your mind. It's 100% free to participate.

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