5 Stocks Ready to Bounce Back

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

Among the 460 stocks in CAPS' Health Care sector, we've unearthed a handful with four- and five-star ratings. The accolades mean that our 135,000 CAPS investors are confident that these stocks will beat the market in the months ahead:

Sources: Motley Fool CAPS; Yahoo! Finance.

When you look at results like those that BioDelivery Sciences achieved, you have to wonder what "recovery" or bouncing back this stock might need. Particularly with biotech, pharmaceuticals, and medical-device companies, a lot hinges on their relationship with the FDA. And in BioDelivery's case, things appear to be looking up. Having received word that the agency wouldn't be issuing a decision extension because the deadline for action was so close, the specialty pharma's Onsolis therapy appears to be on its way to approval -- though anytime you have to guess at FDA action, you're walking on shaky ground.

Yet where BioDelivery and Vanda Pharmaceuticals (NASDAQ:VNDA) have nearly tripled in value over the past year, others, such as Sunrise Senior Living, Elan (NYSE:ELN), and Sequenom, have lost three quarters of their value or more.

Some spring in its step
Where it was failed real estate deals for Sunrise and possibly faulty data for Sequenom, Intuitive Surgical seems to have been a victim of nothing more than the general economic malaise that has gripped the country.

Despite having the successful DaVinci system for robot-assisted surgery, Intuitive is beset by spending cuts at hospitals that are trying to conserve cash. Yet revenues were pretty much flat overall, as unit sales fell, and it deferred revenues associated with system upgrades. Those deferrals, about $20 million worth, will be recognized by the end of the year. Its instrument and accessories sales, however, jumped by 29% on a 60% increase in procedure volume -- an upswing that underscores the system's continued popularity.

Intuitive's short ratio has lessened over the past month, but with nearly 20% of outstanding shares still being sold short, a significant and unwarranted bearish sentiment remains. Perhaps it's being fueled in part by fears over rationing under nationalized health care, but the fundamentals of Intuitive Surgical appear solid, such that any uptick in spending could ignite a short squeeze.

Investors would agree that the worst of the difficulties are behind the company. CAPS member dvena points out that even at the nadir of the recession, Intuitive Surgical was able to keep operations moving forward.

ISRG is on the cutting edge of robotic surgery. Every new article I read involves a surgeon detailing a new use for the DaVinci. ISRG was also able to maintain a fairly high level of sales recently during one of the toughest periods in recent history. With the pent up demand that is occurring now, ISRG's sales will accelerate as the economy improves. I expect a double-bagger within 12 - 18 months.

At 32 times trailing earnings and 26 times forward estimates, Intuitive does not shout out that it's a screaming buy. Earnings over the next two years are expected to grow by only a compounded rate of 8% -- although in this economy, being able to push profits north is an achievement all its own.

Over the past quarter, Intuitive has done well enough to recover some 60% in value, but that pace has slowed. It rose by only 5% in the past month, compared with the average 10% increase enjoyed by the CAPS Medical Device sector.

The ball's in your court
Many factors 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.