Volatile markets seem to be the norm, as stocks gyrate through ups and downs on a daily basis. But sometimes buyout news and other short-term forces can send individual stocks up by 10%, 25%, even 50% -- even on the market's worst days.
For example, shares of troubled bookseller Borders (NYSE:BGP) rose nearly 40% after activist investor and major holder William Ackman said there was a low probability that the company would file for bankruptcy protection.
But beyond less-predictable events like that one are stocks with fundamentally compelling reasons behind a big move. 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. Here's an example of how we can use the collective wisdom of more than 145,000 CAPS members to filter out the noise and find companies with strong potential.
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. Then we can use the insight of the community to add some context to these market movers.
|
Company |
CAPS Rating
|
4-Week |
|---|---|---|
|
VASCO Data Security (NASDAQ:VDSI) |
***** |
26% |
|
Bare Escentuals |
*** |
34.1% |
|
PrivateBancorp (NASDAQ:PVTB) |
*** |
30% |
|
Eastman Kodak (NYSE:EK) |
* |
30.2% |
|
Wave Systems |
* |
25% |
Source: Motley Fool CAPS. Price return from Jan. 8 through Feb. 5.
PrivateBancorp
After a huge sell-off in PrivateBancorp last October, CAPS members bumped the company's rating up a couple notches, with many investors betting that things would improve for the beaten- down lender. While it reported widening losses and skyrocketing third-quarter loan loss provisions, the company showed improvement in its recent fourth-quarter report, with narrowing losses, lower provisions, and a 69% jump in net interest income.
While larger banks like Wells Fargo (NYSE:WFC), JPMorgan Chase (NYSE:JPM), and General Electric's GE Capital are certainly showing the impact of troubled commercial real estate loans, smaller banks are taking the bigger brunt of these bad loans. PrivateBancorp stills sees difficulty with its large amount of commercial and construction loans, but expects them to be manageable. And after raising capital in the fourth quarter, it doesn't expect to require any more in the near term. In CAPS, about 85% of the 210 members rating PrivateBancorp expect it to outperform the market.
Eastman Kodak
Following multiple consecutive quarterly losses, Eastman Kodak recently gave investors some good news, reporting fourth-quarter earnings of $443 million and growing sales. Investors responded by quickly bidding up shares. Management says it's making progress as it continues its multiyear transition from film to digital imaging. While its traditional film business has declined, the company is making strides in the consumer inkjet printer business, an estimated $50 billion market including others like Hewlett-Packard (NYSE:HPQ). And a long list of patents finally helped it negotiate royalty deals with Samsung and LG, as it goes after Apple and Research In Motion in court next. The company looks for continued improvement this year, but many CAPS members aren't quite ready to praise it just yet, because Kodak still sits at a one-star rating. Just 53% of the 616 CAPS members rating Eastman Kodak are bullish on its chances of outpacing the broader market.
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 5,400 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.
