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%.        

Sometimes, it's a ruse. For example, shares of Petrobras Energia (NYSE:PZE) showed what appeared to be a surge of 180% one day last week, but the move was actually the result of a reorganization and share exchange with its holding company that had no fundamental implications for the businesses.

But beyond neutral 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 140,000 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 25% 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 Sept. 4 through Oct. 2.

Taking stock in energy
There has been increased activity in shares of Dynegy because of rumors that NRG Energy (NYSE:NRG), which itself recently rejected a takeover bid from Exelon, may have an interest in acquiring the company. Dynegy recently announced plans to slim down with the sale of nine U.S. power plants to existing shareholder LS Power: The Houston-based energy company is dealing with weaker electricity demand and lower wholesale electricity rates. Dynegy will get $1 billion from the deal, which will cover some maturing debt in coming years and increase its liquidity.

Despite the fact that it reduces Dynegy's earnings potential with the fewer power plants, some investors think the move will bolster the balance sheet and give the company a better chance to return to profitability. It also helps that Dynegy is in a sector that hasn't rallied as much as others, giving 94.4% of the 591 CAPS members rating Dynegy another reason to believe that it will outperform the broader market.

Remain seated, with seatbelts fastened
Airlines such as US Airways and Continental (NYSE:CAL) had been on a hot streak as investors bid up shares in hopes that an economic recovery could translate into an increase in business. US Airways and several others have even received upgrades from JPMorgan Chase and UBS in recent weeks. The company's president recently said that there are signs of improvement in bookings, but like most other airlines, US Airways reported declining traffic in August.

The company has managed to burn an immense amount of cash in the past 12 months, and investors weren't too happy to hear that, like American Airlines parent AMR (NYSE:AMR), US Airways would dilute shares to raise more capital ahead of the slower winter travel season. It's not the first time the company has diluted shares over the past year, and the continued dilution leaves many CAPS members with a bad taste. As such, just 56.5% of the 683 members rating US Airways see it beating the S&P.        

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 other 5,300 stocks that our 140,000-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.