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, an announcement that Intel (NASDAQ:INTC) would pay $884 million to buy out Wind River Systems sent the stock up 47%, even above the $11.50 deal price.

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 135,000 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 that our screen returned. If you'd like, run this screen yourself -- just keep in mind that results may change as the market does.

Source: Motley Fool CAPS. Price return from May 15 through June 12.

Joy Global
Following positive results from competitor Bucyrus (NASDAQ:BUCY) in April, mining equipment manufacturer and commodity markets prognosticator Joy Global reported earnings that significantly outperformed analyst expectations in the second quarter, with net income rising 67% to $120.5 million and sales growing 10% from last year to $923 million. While the good earnings news was a breath of fresh air for investors, the company warned of some short-term risks it faces, like potential order cancellations and slower new orders in the future.

But management has prudently been implementing cost-cutting measures, which are expected to continue to help its bottom line even as the volatility in the commodities markets continues. Although the U.S. has plenty of coal waiting to be mined, a little more than half of Joy Global's sales came from abroad, giving the company a solid position in international markets and helping it remain strong through the tough economy. The company has overwhelming support in CAPS, with more than 98% of the 1,451 members rating Joy Global expecting the stock to outperform the market.

Arena Pharmaceuticals
It's been a volatile ride for investors as drug developer Arena Pharmaceuticals focuses a lot of its efforts on its obesity treatment lorcaserin. After releasing test results earlier in the year that were shy of a proposed FDA guideline, Arena recently released better late-stage results for the drug. Patients who took it had "highly significant" weight loss in their first year and were more likely to maintain it. And the drug didn't show adverse effects, like the heart problems that caused Wyeth's blockbuster fen-phen to be recalled in the late 1990s.

More test results are expected in September, and CAPS members are mostly bullish on the chances for lorcaserin to be approved. The company laid off about a third of its workforce to save money and has about $70 million in cash and short-term investments while it waits for more results and a potential drug application filing by the end of the year. Many CAPS members are anticipating great things from Arena, as 94% of the 462 members rating the drug developer are bullish on its chances to beat 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 5,300 stocks that our 135,000-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.