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 of Chattem, which makes over-the-counter health-care products, jumped 33% when it was announced that sanofi-aventis would buy it for a hefty premium.

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 poorer-performing peers. Let's use the collective wisdom of more than 145,000 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.

Source: Motley Fool CAPS. Price return from Nov. 27 through Dec. 24.

Alcoa
Shares of America's largest aluminum producer have floated higher lately after a JPMorgan Chase analyst lifted profit estimates for Alcoa and competitors such as Century Aluminum (NASDAQ:CENX) because of a predicted increase in metals prices and demand next year. And many investors like Alcoa's recent move to team up with Saudi Arabian Mining Co. in a $10.8 billion deal to invest in an aluminum-production facility. The company sees it as a growth opportunity that will boost its competitive position against rivals Rio Tinto (NYSE:RTP) and Russian producer UC Rusal. CAPS members like Alcoa's long-term potential and see a growing demand for aluminum. As such, 93% of the 2,749 members rating Alcoa in CAPS expect it to beat the broader market.

New York Times and Gannett
December has capped a year that has been somewhat of a reversal of fortune for investors in newspaper publishers like New York Times and Gannett. After a protracted fall over the past several years, shares have been gaining momentum lately, getting an extra push from a Wells Fargo analyst who raised his ratings and profit forecasts on the companies because of an improving ad market that should lead to higher fourth-quarter earnings. But an improving ad market still doesn't translate to higher revenues -- rather a slower decline than before -- and cost-cutting has been a big factor responsible for earnings results. New York Times still expects a 25% drop in fourth-quarter print-ad revenue, offset by better online advertising, and both companies recently laid off more employees to cut costs.                                              

Many investors see newspaper publishers' challenge of generating significant revenue from the Internet as a daunting one, so CAPS members have kept New York Times' rating at one star and Gannett's at two stars for a few years. While McClatchy has resorted to panhandling for online donations, New York Times and Washington Post are trying to strengthen their relationship with Google (NASDAQ:GOOG) to help drive Internet traffic. Despite the efforts, which many believe smack of desperation, only one-third of the 381 CAPS members rating New York Times expect it to outperform the market. Gannett fares better, with 68% of the 380 CAPS members rating Gannett saying they're bullish.

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 145,000-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.