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 Momenta Pharmaceuticals jumped 82% after it gained long-awaited Food and Drug Administration approval for its generic version of sanofi-aventis' Lovenox.

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 20% 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.

Company

CAPS Rating
(out of 5)

4-Week
Price Change^

Infinera (Nasdaq: INFN)

*****

43.0%

E*TRADE Financial (Nasdaq: ETFC)

****

26.0%

Monsanto (NYSE: MON)

****

24.3%

Source: Motley Fool CAPS.
^From July 2 through July 30.

Infinera
Stock in optical networking specialist Infinera has made a strong bounce back from its recent lows after reporting a solid second quarter that beat expectations. The company reported a 62% jump in revenue and expects the momentum to continue, giving an upbeat third-quarter forecast. Infinera isn't just an outlier. Competitor Alcatel-Lucent (NYSE: ALU) shares a similar bullish view with a strong outlook for the second half of the year.

Despite heavy competition in the networking industry, CAPS members have held Infinera's CAPS rating at the highest five-star rating for the past couple of years; 97% of the 1,244 members rating Infinera see it as a market-beating investment.

E*TRADE Financial
Investors have been regaining confidence in E*TRADE lately, as the online broker turned its first quarterly profit in three years. The company is seeing improvement in the troubled loan portfolio it built during the real estate boom and expects loan-loss provisions to continue declining through 2011.

Similar to recent quarterly reports from competitors TD AMERITRADE (Nasdaq: AMTD) and Charles Schwab (NYSE: SCHW), E*TRADE showed higher trading volume helped by the May 6 flash crash, but also saw lower volume in June as retail investors have pulled back in trading.

Some CAPS members still see risk in E*TRADE's shares, but overall give it a solid four-star rating, with 94% of the 2,937 CAPS members rating the company bullish on its chances to outpace the broader market.

Monsanto
Similar to agrochemical competitor Syngenta's (NYSE: SYT) lower first-half profit amid a lackluster pricing environment, Monsanto posted a 45% drop in fiscal-third-quarter earnings with falling sales affected by steep competition for its Roundup weed killer. Despite the financial blow from generic weed killers, many investors have been buying into shares recently as they look for strong performance from Monsanto's seed business. There's other evidence that the seed market is looking up: Competitor DuPont recently said it expects moderately higher seed sales in the third and fourth quarters.

There's still a good deal of uncertainty as Monsanto plows through restructuring the herbicide business, but CAPS members give the stock an above-average four-star rating and a couple of the company's top executives recently put some big money on the line by buying shares. In CAPS, 96% of the 3,076 members weighing in on Monsanto expect it to outperform the S&P.

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.

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 57 points on average, take a free 30-day trial.

Fool contributor Dave Mock has his own story, but there's no "happily ever after" at the end of it. He owns shares of Alcatel Lucent. Monsanto is a Motley Fool Inside Value selection and Motley Fool Options has recommended a synthetic long position on its shares. Infinera and Momenta Pharmaceuticals are Rule Breakers recommendations. Charles Schwab is a Stock Advisor selection. Syngenta is a Global Gains pick. The Fool owns shares of Infinera. The Fool's disclosure policy has the momentum of a freight train, but can stop on a dime.