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 165,000-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.

I've used the CAPS screener to filter out $100 million-plus companies that have seen their stock price appreciate by at least 20% in the past 13 weeks even while they remain at least 45% below their 52-week high.

Source: Motley Fool CAPS. Results from Feb. 26 through May 24.

With a four-star rating, a good number of CAPS members like the potential of CardioNet's wireless heart monitoring business, especially after a Roth Capital Partners analyst gave it a bullish upgrade earlier this year, anticipating stable or even improved reimbursement rates. But Western Refining hold's an even better five-star rating, so let's take a closer look at what's cooking in the refining business.

The bottom case
Investors cite several reasons why Western Refining may be looking nowhere but up these days. After enduring years of bad news in the oil and gas refining business, some signs of improvement have been showing with Western Refining and peers recently that have many investors anticipating a strong turnaround. The company posted 40% higher first-quarter revenue and looks for an uptick in throughput in the second quarter, while peer Frontier Oil also expects continuing improvement in the second quarter. And similar to Holly (NYSE: HOC), Western Refining has been seeing some margin improvement. With shares of Western Refining more than 90% below their 2007 peak some CAPS members believe the refining industry will eventually pull out of its slump and hence see much more upside potential than downside risk in the stock.   

Western Refining has also seen a positive impact from the numerous cost cuts that the company has managed implement, and improvement in some areas of the economy has the company seeing early signs of renewed demand. Combined with low stock prices and the summer driving season upon us, many CAPS members see the refining industry finally turning a corner.

Or further to fall?
Yet even though Western Refining looks poised to grow, the environment for refiners still has many of them struggling with losses. While integrated oil majors ExxonMobil (NYSE: XOM) and ConocoPhillips (NYSE: COP) have been able to offset the losses in their refining segments from higher profits from pulling oil from the ground, Western Refining, Frontier Oil, and Tesoro (NYSE: TSO) all posted first-quarter losses. And weak refining isn't exclusive to the U.S. as Royal Dutch Shell (NYSE: RDS-A) also continues to struggle with low refining margins and reported lower plant utilization in the first quarter. Wall Street pros don't see any immediate improvement either, with the average analyst still estimating Western Refining will end up in the red in the coming quarter. And despite an upcoming summer driving season that should help demand for fuel, some investors aren't ready to jump in until they see clearer signs of a recovery.             

What's your call?
Despite the current uncertainty, about 96% of the 1,247 CAPS members rating Western Refining are bullish and see it outperforming the broader market. For my part, the long-term prospects of Western Refining look very attractive relative to its stock price, though the timing and strength of a recovery is unclear to me.

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 165,000-plus members have covered.