3 Stocks Springing Back

With all the volatility in the markets today, there's no shortage of market seers attempting to call a bottom. Man of the Year Ben Bernanke called a bottom not once, but twice. Heck, even Keanu Reeves laid out what a world-ending market bottom looks like.

Investors should consider buying stocks after a big decline, when pessimism has unduly beaten good companies down to great prices. That's why we here at the Fool -- and 145,000-plus investors like us -- look to the Motley Fool CAPS community to help sniff out the real opportunities from languishing companies driven by speculation.

A real bottom or another leg down?
Of course, there's no foolproof method for timing a market bottom. But CAPS has a great balance of both quantitative and qualitative resources available on 5,300 stocks, and even a nifty stock screening tool to help investors quickly zero in on potential investment opportunities. Once we've rounded up our candidates, we can use all the information in CAPS to test whether each company has already hit bottom or simply primed shareholders for further pain.

I've used the CAPS screener to filter out $100 million-plus companies that have seen their stock price appreciate by at least 10% in the past 13 weeks even while they remain less than 40% above their 52-week low.

Source: Motley Fool CAPS. Results from Oct. 23 through Jan. 22.

The bottom case
When looking at the market for wireless devices today, investors see several reasons why technology developer and licensor InterDigital may be looking nowhere but up. The market for feature-rich smartphones continues to be hot, and InterDigital has seen the benefits flow to its bottom line thanks to license agreements with top players like Apple (NASDAQ:AAPL) and Research In Motion (NASDAQ:RIMM). It came in with surprisingly strong revenue and earnings in the third quarter, and the good news on profits has sent the stock on a nice upward trajectory.

Especially considering that InterDigital is only a $1-billion company, having in excess of $400 million in cash and short-term investments on its balance sheet also gives many investors confidence in its ability to navigate what is often a treacherous legal course of licensing its wireless technology. With the stock still well below its highs, and plenty of potential still wrapped up in its intellectual property, it's not a big stretch to see InterDigital soar higher from here. 

Or dead cat in disguise?
Even though InterDigital may look like a tightly wound spring to some investors, the company does face a lot of uncertainty going forward. InterDigital recently lost its long-time chairman of the board, Harry Campagna, late last year and the company's recent guidance on fourth-quarter revenue was a little weaker than what Wall Street was hoping to see, with Japanese licensees continuing to negatively impact royalty growth. The company has also been taking some legal jabs to the head from heavyweight Nokia (NYSE:NOK), who has even mustered up the gumption to turn to the courts to take on Apple in what is likely to be a long and costly intellectual property battle, much like the tussle with fellow titan Qualcomm (NASDAQ:QCOM) a few years back. While there's certainly going to be more back-and-forth in terms of small legal victories, some investors believe there's little chance of a windfall settlement coming InterDigital's way, and that the company will have to fight for scraps.

What's your call?
Overall, nearly 96% of the 1,141 CAPS members rating InterDigital are bullish and see it outperforming the broader market. For my part, I see a lot of promise wrapped up in InterDigital and its ability to generate strong cash flow. But I'd like to see a cheaper share price before leaping in.

But what ultimately counts is your own opinion; CAPS is just there to help you form it. The best part is that the Motley Fool CAPS database is all free, and you can even add your own insight on any of the 5,300 stocks that our 145,000-plus members have covered.