Whether it's the corporate lunchroom, your cubicle, or the local watering hole after work, there are regular places we gather to discuss news, sports or -- if you're like us -- stocks. Here at Motley Fool CAPS, we gather around the virtual water cooler daily to rate stocks and delve into their merits as investments.

Our 130,000-strong CAPS community -- where members give the thumbs-up or thumbs-down to some 5,300 stocks -- has earned its points by seeking out the businesses it thinks will outperform the market. Below we'll take a look at some of the top stocks in the CAPS universe that you're talking about the most and whether you think they'll continue their winning ways.

Stock

CAPS Rating (5 stars max.)

No. of Calls

% Outperform Calls

Exelixis (NASDAQ:EXEL)

****

2,292

96%

Merck (NYSE:MRK)

****

2,370

92%

Quality Systems (NASDAQ:QSII)

****

2,312

96%

VASCO Data Security (NASDAQ:VDSI)

*****

2,228

97%

Volcom (NASDAQ:VLCM)

****

2,233

95%

A tall drink of water
Considering the tsunami of consolidation sweeping over the pharmaceutical industry -- the deals are much too big to be called just a wave -- the opportunity for tie-ups with smaller biotech companies becomes greater.

One such development-stage company, Exelixis, saw revenues in the most recent quarter edge higher on higher milestone payments from Bristol-Myers Squibb (NYSE:BMY) while expenses were reduced because it was able to transfer certain drug-development costs to GlaxoSmithKline (NYSE:GSK). Although sales were slack compared with the year before,  causing losses to widen, it ended the year with more than $284 million in cash (but over $500 million in cash and committed funding) and it retains a slew of potential drug candidates in its pipeline.

As the industry giants face the prospect of losing patent protection on their most successful and profitable drugs and see their pipeline of replacement candidates slow to a trickle, scooping up one of these smaller biotechs becomes more probable, particularly after the big mergers have fallen off the newswires. The threat of generics will force Big Pharma's hand. According to the Generic Pharmaceutical Association, there are $15 billion worth of drugs that will be exposed to generic competition this year, with another $21 billion worth opening up in 2010.

Merck is gobbling up Schering-Plough, Pfizer is swallowing Wyeth, and Genentech may at last end up being consumed by Roche. These mega deals will satiate the immediate concerns of the giants, but the longer-term needs of the pharmaceutical industry will have them eying the next generation of biotech contenders.

With Exelixis having some deep ties into both Bristol-Myers and Glaxo, either one could find the development-stage company just the right size -- and price -- for a merger. Investors are starting to view Exelixis as a tasty morsel, such as CAPS member TMFSTX, who views the combination of pipeline and cash as irresistible -- let alone the tastes of the Fool's own biotech guru, Charly Travers.

Here's my biotech lottery ticket. Why this one? [Exelixis] has a ton of products in the pipeline and enough cash to continue the testing/development process. They are also a nice takeover target for a big pharma company. The real reason I like EXEL? Charly Travers. Charley knows biotech. Charly likes EXEL.

Similarly, CAPS All-Star member MattH42004 noted Exelixis' speculative nature back in January, but also figured its pipeline was better than others in the industry for producing a potential winner.

A speculative play, but one with a lot of potential upside. This company has one of the best potential drug lines in the industry, and it seems apparent that they will recieve all the funding they need to continue R&D, especially after their recent cost cutting. The heavy insider buying can also be seen as a positive sign...

Gather 'round
The CAPS community is like trying to take a sip from a fire hose. With so many good opinions about today's top companies,  why not grab a pointy paper cup from the dispenser and join us at the Motley Fool CAPS water cooler, where your input can help guide other investors to stocks with bright prospects for growth? 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.

Sign up today for the completely free service and let us hear what you have to say about the great and almost great companies that interest you.

Volcom is a Motley Fool Hidden Gems selection. GlaxoSmithKline is a Motley Fool Income Investor pick. Pfizer is a Motley Fool Inside Value recommendation. Exelixis is a Motley Fool Rule Breakers selection. Quality Systems and VASCO Data Security International are Motley Fool Stock Advisor recommendations. The Fool owns shares of Exelixis. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Duprey owns shares of Merck but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.