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, shares in business analytics company SPSS rose nearly 41% when it was announced that IBM finally wised up and would buy the company for $1.2 billion in cash.

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 the results may change as the market does.

Source: Motley Fool CAPS. Price return from July 2 through July 31.

Is the cat back?
While it is still reeling from the effects of a softened global economy, heavy equipment maker Caterpillar recently announced $371 million in net income in the second quarter, bouncing back from reporting its first quarterly loss in 17 years in April. Sales dropped at home and abroad, and the company has slashed costs in response to the slow demand that's affected others like Manitowoc (NYSE:MTW) and Terex.

The company noted, though, that it has been seeing signs of stabilization and significant improvement in credit markets, which could help customers better obtain financing to purchase equipment. And although the third quarter isn't expected to fare much better, Caterpillar raised its earnings forecast for the year. While significant near-term impact isn't expected from the U.S. stimulus, Caterpillar has seen higher deliveries in China and said that the estimated $1.7 trillion in stimulus money that's being injected into economies throughout the world is beginning to work, which has some CAPS members anticipating a better future for the company. Today, 94% of the 4,974 CAPS members rating Caterpillar expect it to outperform the market.

Getting the auction house in order
Despite some irritated power sellers and a weakened online marketplace, some CAPS members think eBay's strong moat and solid free cash flow still make it an attractive investment today. Its PayPal and yet-to-be-spun-off Skype businesses showed strong revenue growth in the second quarter while its marketplaces division fell 14%, which was enough to impress some analysts on Wall Street who were expecting worse, causing shares of eBay to jump.

The online transaction firm has continued to make changes to try to turn around its main auction site, including a new buyer loyalty program. Fixed-price listings, which have done well for rival sites like Amazon.com (NASDAQ:AMZN), grew to 51% of the total value of all goods sold on eBay's site compared to 43% last year, and the number of active registered users grew 8% sequentially. Although its second-quarter results had plenty of room for improvement, they have led to several analyst upgrades and even a recent bullish call from Barron's, which still sees a chance for untapped value in eBay's stock. In CAPS, though, many members are still on the fence, as only 86% of the 4,016 rating eBay see it beating the broader market going forward.

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.