However hard the market slams a stock, there's always the chance it'll come bouncing right back. We'll consult our Motley Fool CAPS community to find shares on the rebound, examining one specific sector of the economy in search of companies with rising CAPS ratings.

Looking at more than 400 stocks in the basic materials sector with market caps over $100 million, we've chosen a handful with top four- and five-star ratings. Those accolades mean our 130,000-member CAPS community is confident that these stocks will beat the market in the months ahead:


CAPS Rating Today

Recent Price

1-Year Return

Est. LT Growth Rate

Alcoa (NYSE:AA)





China Precision Steel





Pan American Silver (NASDAQ:PAAS)





Stone Energy (NYSE:SGY)





Taseko Mines (NYSE:TGB)





Source: Motley Fool CAPS; Yahoo! Finance.

Basic materials, as its name implies, covers a broad swath of businesses that provide the economy with the primary tools necessary to get the job done. That's why you'll find the list populated by miners of gold and silver, energy stocks, and chemical giants like Dow Chemical (NYSE:DOW) and even paint specialist Sherwin-Williams.

Even though the average company in the sector lost some 42% of its value over the past year, you can still find winners. Western Refining (NYSE:WNR), for instance, has seen its stock soar 52% in the last year, while IAMGold has risen more than 60%. But with so much of the sector down, let's take a closer look at why investors might think some of the losers aren't poised to jump from the frying pan into the fire.

Some spring in its step
One of the strongest cases being made in favor of precious metals these days is the inflationary pressure created by the trillions of dollars that the government is pumping into the economy. While we might not end up as the next Zimbabwe, the potential for hyperinflation remains very real.

Noted economist John Hussman has suggested that because the government insists on fully bailing out bank bondholders -- automaker bondholders need not apply -- a staggering $1 trillion in private investment has been crowded out of the market, virtually guaranteeing that we're going to double-digit inflation.

While gold will always command center stage among precious metals, silver might just end up being a more precious commodity that will slingshot past its yellow cousin. Coeur D'Alene Mines (NYSE:CDE) is treating shareholders to an expected 66% jump in silver production and an estimated 85% jump in gold output from its new mines this year.

Similarly, Pan American Silver has already reported first-quarter silver production that increased 8% to 4.9 million ounces, while its gold output tripled to more than 20,000 ounces, a new record. Pan American was also able to reduce cash costs by 28% in the quarter, which gave the company an 11% reduction in its cost of sales, despite lower revenues from depressed gold and silver prices.

It's that kind of upbeat report that has top-rated CAPS All-Star 00100 looking for Pan American Silver to glitter in the months ahead:

Upthumb. No debt, high gross margin. Recent strike settled in Peru. Likely to rise on improving prospects.

And it's the potential for a worldwide glut of inflation that had another top CAPS name, bridgeboy0, seeing the silver lining behind the scary prospect last month:

When things turn around it will be a result of the governments around the world having pumped money of all kinds into the system. This will cause a surge in inflation as economies start to tick up. That's why I've been and continue to be bullish on precious metals and the miners of said metals. Really, anything that is sensitive to inflation is a good place to be.

The ball's in your court
There are many factors that go into whether a stock is a buy or sell, so it pays to start your own research on these stocks on Motley Fool CAPS. 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. Head over to CAPS today and share your thoughts with other investor-analysts on whether you think these stocks are ready to bound higher.

Sherwin-Williams is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters today, 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.