Drink In These 5 Top Stocks

Whether it's the corporate lunchroom, your cubicle, or the local watering hole after work, there are regular places we gather to discuss news, sports or -- if you're like us -- stocks. At Motley Fool CAPS, we gather around the virtual water cooler daily to rate stocks and delve into their merits as investments.

Our 135,000-strong CAPS community -- where members give the thumbs-up or thumbs-down to about 5,300 stocks -- has earned its points by looking for businesses it thinks will outperform the market. Below, we'll take a look at some of the top stocks in CAPS that draw the most talk and whether you think they'll continue their winning ways.

Aside from this week's series being brought to you by the letter A, virtually all the companies listed in the table have enjoyed a quarter of rising values. Maybe that's not as good as the broader market, which is up more than 10%, but it's enough to convince some investors that the "green shoots" theory might actually be taking hold.

A tall drink of water
Yet not everyone has benefited from the bottoming out we're experiencing. Applied Materials lost more than 5% over the past three months as redundancies in the semiconductor industry have led to chip makers forming alliances with what were once rivals. Intel (NASDAQ:INTC), for example, is joining forces with both Samsung and Toshiba to develop advanced chips, while Micron (NYSE:MU) is aligning itself with competing memory maker Nanya Tech.

Still, that won't be enough to save others in the industry. Applied Materials CEO Mike Splinter has said he fully expects others to falter, joining Spansion and Qimonda. Applied Materials, though, derives an increasing portion of its revenues from the solar industry, so its results will depend more on it. While chips for the solar industry was a bright spot in the company's recent quarterly report, with segment sales quadrupling, a number of top names in solar have put up some wimpy profit numbers that could lead to weaker results for Applied Materials.

The cyclical nature of the chip industry means investors are cautiously optimistic that the tide will turn soon. CAPS member JjcampNR writes that Applied Materials has been oversold in this market, and while those in the semiconductor industry might not go forward with full-scale capital expansion programs, economic recovery would lead to growing demand.

Oversold, low debt ratio in industry, chips are a cycle of explosive boom and explosive bust resulting in large price swings for AMAT. When customers start buying and ramping up production again they'll be well suited to take advantage of demand.

Drawing down goodwill
At the other end of the spectrum is Adobe Systems, whose shares have jumped more than 24% over the past three months. That's interesting because in its earnings for the latest quarter, it looked like its flagship Creative Suite product wasn't catching on the way management had expected, while deep cost-cutting measures, such as eliminating hundreds of jobs, haven't stanched declining profits.

It just might be that creative types are waiting for the release of the next iteration of Creative Suite -- CS5. If timed properly with a recovering economy, that release might provide an impetus for software upgrades. CAPS member rivescpa isn't convinced, though, and thinks Adobe's decision to start charging for its formally free Acrobat program (even if the services are enhanced) isn't going to help.

Adobe just announced that over the next year they will be "releasing" and charging for collaboration software that Google has had out for over a year and gives away for free. [What] part of that makes good marketing sense?

Gather 'round
The CAPS community is like trying to take a sip from a fire hose. With so many good opinions about today's top companies, why not grab a pointy paper cup from the dispenser and join us at the Motley Fool CAPS water cooler, where your input can help guide other investors to stocks with bright prospects? 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.

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