These Stocks Are Bouncing Back

However hard the market slams a stock, there's always the chance it'll come bouncing right back. We'll consult our Motley Fool CAPS community to find shares on the rebound, examining one specific sector of the economy in search of companies with rising CAPS ratings.          

There are 77 stocks listed under consumer durables in the CAPS screener, and we've unearthed more than a few with four- and five-star ratings. Those accolades mean our 160,000-member CAPS community is confident that these stocks will beat the market in the months ahead. Let's see what members are saying about the ones below:

Source: Motley Fool CAPS; Yahoo! Finance.
^CELM went public Jan. 29, 2010, at $4.64.

As the broader market averages continue to stage a pretty bold recovery, consumer discretionary stocks have done even better, with the average company more than doubling in value from the year-ago period. Of course, those returns include some strong performances not only from the companies above but also bed maker Select Comfort, which jumped 850%, and IMAX (Nasdaq: IMAX), which tripled in value.

So let's take a closer look at why investors think that some of these other companies won't be jumping from the frying pan into the fire from the market's lofty heights.

Some spring in its step
An investment in China Electric Motor is a bet on the growing Chinese middle class. Almost 60% of its revenue comes from mainland China and its tiny motors appear in all sorts of consumer goods, including household appliances, power tools, and digital controls used to start mechanical equipment and other, larger motors.

The Chinese government has been pouring money into its economy, and China Electric Motor is counting on stimulus spending directed toward autos and home appliances to fuel greater demand this year. Maybe they have their own version of Cash for Clunkers and Cash for Refrigerators that will help the company continue gaining market share over rivals Harbin Electric (Nasdaq: HRBN) and Nidec. Revenue jumped 58% in the fourth quarter with a similarly strong increase in gross and operating profits.

CAPS member dreamingofpowder notes the variety of uses for the company's motors in giving China Electric Motor a thumbs-up.

Untangling the chain
When you realize that Fuqi International trades at just a third of what it did last September, but is still some 58% higher than it was a year ago, you realize just how high this stock had climbed. The Chinese jewelry maker was also a bet on the country's growing middle class, but got tripped up in a web of accounting errors that has since laid the stock low and reminded everyone of the risks associated with investing in emerging markets. India's Mahindra Satyam (NYSE: SAY) also got enmeshed in an accounting scandal resulting in its shares getting crushed.

Fuqi says it's making progress untangling itself from its self-imposed mess, and the prospects for wholesale and retail demand remain solid. Investors, though, are apparently worried about there being other problems. The stock has been relatively flat since the news broke.

CAPS members seem to share a general consensus that the stock's pummeling is overdone. MagicDiligence says the risks baked into the share price might just be worth the potential rewards:

Fuqi has failed to file their Q4 results in a timely matter, receiving a de-listing notice, and cash flow continues to come in negative, while reported earnings skyrocket (Q3 sales grew 36% and profits 192% year-over-year). However, at a 31% earnings yield with 20% expected growth, there just might be enough risk priced into the stock to earn big returns here.

Taking aim at growth
Perhaps it's a good thing that the intensity of the national health-care debate diverted Congress' attention from other issues. Many had feared anti-gun sentiment in Congress would further restrict the right to bear arms and cripple the country's two publicly traded gunsmiths.

While Sturm, Ruger's recent earnings report showing rising net sales suggests it took market share from industry mate Smith & Wesson Holding (Nasdaq: SWHC), the drop in NICS background checks hints future growth might not be such an easy shot.

Yet more than 91% of the CAPS members rating the sharpshooter believe it will hit the target of outperformance. Why not take a shot of your own on the Sturm, Ruger CAPS page and tell us whether you would load your money into the stock.

The ball's in your court
There are many factors that go into whether a stock is a buy or sell, so it pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page. Head over to CAPS today and share your thoughts with other investor analysts on whether you think these stocks are ready to bounce higher.