3 Stocks Breaking Out

Volatile markets seem to be the norm these days, as stocks gyrate through ups and downs on a daily basis. But sometimes buyout news and other short-term forces can send individual stocks soaring by 10%, 25%, even 50% -- even on the market's worst days.        

For example, shares of A-Power Energy Systems soared 24% one day recently after it reported a jump in earnings and raised its full-year outlook.

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 165,000 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 15% 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 CAPS investment community to add some context to these market movers.

Source: Motley Fool CAPS. Price return from May 21 through June 18.

Titanium Metals
With a pickup in demand for titanium products from the commercial aerospace sector, Titanium Metals generated stronger-than-expected first-quarter earnings -- albeit not strong enough to propel the bottom line above last year's numbers. The company sees successful test flights of new aircraft and a growing backlog for aircraft as strong signs for future demand and one of its customers, United Technologies (NYSE: UTX), recently said that 2010 has been better than expected with rising order rates. Titanium Metals expects orders to accelerate over the next few years with help from aircraft replacements, including Boeing's new next generation 737 and long-awaited 787. The potential for increasing business has kept Titanium Metals' CAPS rating locked in at five stars for most of this year, with 96% of the 2,547 CAPS members rating the company expecting it to outperform the broader market.

MercadoLibre
While eBay (Nasdaq: EBAY) recently posted a modest 11% growth in quarterly profit -- which oddly hasn't excited investors quite like it did in its heyday -- MercadoLibre posted 78.5% first-quarter earnings growth as it continues to gain traction in all of its business units. CAPS members still see strong growth ahead, but the rising share price has also prompted some insiders to cash in some profits recently. Despite some concerns of the stock getting ahead of itself, 92% of the 874 CAPS members rating Mercadolibre still see it as a market beating investment today.

OmniVision
Optical image chip maker OmniVision has been cranking out sales, generating a 77% jump in its fiscal fourth quarter revenue as demand for smartphones and other devices remains strong. And it expects the demand to continue, keeping its entire supply chain busy, including mega contract chipmaker Taiwan Semiconductor (NYSE: TSM), which itself reported record sales in May and expects demand to continue. Analysts believe OmniVision's chips are in the new iPhone 4, which has had sales so strong that AT&T's systems were initially overloaded. OmniVision's CAPS rating has been fluctuating between three- and four-stars lately and many CAPS members like the increasing revenue potential -- particularly the dollars that may be lurking in the popular new iPhone. In CAPS, 94% of the 619 members rating OmniVision are bullish.

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 165,000-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.