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 150,000-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 5,400 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 25% in the past 13 weeks even while they remain at least 40% below their 52-week high.

Company

CAPS Rating
(out of 5)

13-Week
Price Change

% Below 52-Week High

Stewart Information Services

****

26.9%

40.6%

First Bancorp

**

32.7%

71.8%

PMI Group (NYSE: PMI)

**

27.2%

44.4%

Source: Motley Fool CAPS. Results from Dec. 4 through March 1.

The bottom case
After its near-death experience, investors see several reasons why PMI Group may be looking nowhere but up today. With its stock sitting at just a few bucks per share, the mortgage insurer is far from the heights it reached a couple of years ago when mortgage loans were more prolific than rabbits in spring.

With the company believing the worst has passed, some CAPS members think there is only room for improvement in shares of the company. Along with peers MGIC Investment (NYSE: MTG) and Radian Group (NYSE: RDN) and the mortgage insurance arm of Genworth Financial (NYSE: GNW), PMI Group stands to benefit from increasing government efforts to modify loans to keep homeowners in their homes. And it could see improving trends in delinquencies this year as well.

Investors are also bullish on the company's recent approval from Fannie Mae (NYSE: FNM), and hopeful approval from Freddie Mac, to write new insurance under one of its subsidiaries, where other divisions of PMI may be limited by capital requirements. With the addition of several new players to the mortgage insurance space, some investors see the fresh capital as a vote of confidence that better times are ahead for the industry.

Or dead cat in disguise?
But even though PMI Group may look poised to perform, the losses are still piling up for it and other mortgage insurers, and many challenges lie ahead. PMI Group posted a wider fourth-quarter loss than the prior year, with rising loan loss provisions, and many investors don't see the U.S. housing market as out of the woods just yet.

Many homeowners are deep underwater on their mortgages, and bad loans held by banks like Bank of America (NYSE: BAC) and Citigroup (NYSE: C) could spell more trouble for insurers. A recent report by Standard & Poor's expects a shifting emphasis in the coming years from mortgage modifications to loan liquidation -- despite efforts by the government to avert foreclosures -- and many investors believe it is simply delaying the inevitable.

What's your call?
Overall, 61% of the 516 CAPS members rating PMI Group are bullish and see it outperforming the broader market. For my part, I've been steering clear of any sector that is heavily influenced or supported by government policies that are difficult to predict.

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 5,400 stocks that our 150,000-plus members have covered.

The Motley Fool Stock Advisor service looks for companies with strong management poised to beat the market over the long haul. To see all the stocks that have helped Tom and David Gardner beat the market by 53 points on average, take a free 30-day trial.

Since getting some new sneakers, Fool contributor Dave Mock is showing a little more spring in his step, too. He owns no shares of companies mentioned here. Stewart Information Services is a Motley Fool Hidden Gems recommendation. The Fool's disclosure policy sometimes gets wound too tight and needs a deep-tissue massage.