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 did so 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 160,000-plus investors like us -- look to the Motley Fool CAPS community to help sniff out the real opportunities among 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 15% in the past 13 weeks, even while they remain at least 40% below their 52-week high:


CAPS Rating
(out of 5)

Price Change

% Below 52-week High

RAIT Financial Trust (NYSE: RAS)




Lloyds Banking Group (NYSE: LYG)








Source: Motley Fool CAPS. Results from Dec. 24 through March 22.

The bottom case
Lloyds Banking has survived what many believe was the worst of the global financial crisis. Several CAPS members see several reasons why the company may have lots of long-term upside potential ahead. After scrambling to mitigate the effects of toxic loans that have also hit peers like Allied Irish Banks (NYSE: AIB), Royal Bank of Scotland (NYSE: RBS), and Barclays (NYSE: BCS), Lloyds recently surprised many investors with predictions that it will return to profit in 2010, noting improvements in its core businesses.

Operationally, the bank has gotten off to a good start so far this year, with well-controlled costs and a better than expected situation surrounding its impairments. Granted, things are still bad with 9% of its loans in the non-performing category, but Lloyds' margins continue to improve. Its purchase of HBOS added risk, but JacobRiis and other CAPS members are excited about the additional market share the deal could eventually bring. They expect that Lloyds will hold an even stronger position in the U.K. market in the coming years.

Or dead cat in disguise?
Even though some investors think Lloyds Banking can't go any lower, plenty of risk remains on the bank’s balance sheet. The HBOS acquisition, which led the U.K. government to bail out Lloyds in exchange for a large stake in the bank, also left Lloyds with a stack of bad paper that the firm is still working to overcome. That mess forced the company to report another big loss in 2009.

A growing sentiment suggests that U.S. banks like Wells Fargo (NYSE: WFC), Citigroup, and JPMorgan Chase (NYSE: JPM) have made it through the worst, and Lloyds similarly believes that losses from bad loans peaked last year. Still, its levels of nonperforming assets remain far too high for some investors' comfort, particularly in Ireland. And with persisting credit strains and an expected slow recovery in the U.K., others remain worried about the nation's fragile economy and its potential effects on Lloyds' revival.

What's your call?
Overall, close to 94% of the 978 CAPS members rating Lloyds Banking Group are bullish, expecting the bank to beat the broader market going forward. I can certainly see many reasons to have faith in Lloyds' long-term outlook. But I'm not completely confident that the bank has seen the bottom -- too much risk remains present in too many European economies. I suspect shares might get even cheaper at some point.

Ultimately, your own opinion matters most; CAPS is just there to help you form it. Happily, the Motley Fool CAPS database is entirely free, and you can even add your own insight on any of the 5,400 stocks that our 160,000-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 56 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. Allied Irish is a former Global Gains pick. The Fool's disclosure policy sometimes gets wound too tight and needs a deep-tissue massage.