With all the volatility in the markets today, there's no shortage of market seers trying 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 160,000-plus investors like us -- look to the Motley Fool CAPS community to help distinguish 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 opportunities. Once we've rounded up our candidates, we can use all the information in CAPS to test whether each company has already hit bottom or simply primed shareholders for further pain.

I've used the CAPS screener to filter out $100 million-plus companies whose stock price has appreciated by at least 20% in the past 13 weeks even while remaining at least 45% below its 52-week high.


CAPS Rating
(out of 5)

Price Change

% Below 52-week High

Conn's (Nasdaq: CONN)




Melco Crown Entertainment (Nasdaq: MPEL)




Borders Group (NYSE: BGP)




Source: Motley Fool CAPS. Results from Dec. 18, 2009, through March 15.

The bottom case
While some contend that investing in casino stocks holds the same odds as gambling at their tables and slots these days -- that is, the house always wins -- many investors nonetheless see several reasons why Melco Crown Entertainment may be the exception. Business has been booming in Macau recently, which has helped shares of Melco Crown Entertainment head back in a positive direction after their recent slump. The company posted a nearly 60% jump in fourth-quarter revenue, helped in part by its new City of Dreams casino now open there. And while Penn National Gaming (Nasdaq: PENN), MGM Mirage (NYSE: MGM), and other operators still wait for gamblers to return to the tables in Las Vegas and elsewhere in the U.S., gambling revenue in Macau rose nearly 70% year over year in both January and February. Many investors like the Macau pure-play potential of Melco Crown Entertainment because Macau is the only place to gamble legally in China, and there, the recession hasn't kept away as many visitors with disposable income. The Macau-focused spinoffs of Wynn Resorts (Nasdaq: WYNN) and Las Vegas Sands (NYSE: LVS) are also sharing in the success there; they recently reported an increase in business. The strong growth prompted one Credit Suisse analyst to upgrade shares of Melco Crown Entertainment, and like Melco's management, many CAPS members also expect the momentum to continue.  

Or dead cat in disguise?
Even though some metrics have improved for Melco Crown Entertainment, it continues to lose money on the bottom line and its revenue growth in the fourth quarter still wound up short of Wall Street's expectations. Its fourth-quarter loss widened to nearly $90 million, and analysts estimate the company will be in the red for the foreseeable future, leaving some investors unwilling to invest when there are more profitable competitors with better prospects. While some CAPS members are bullish on the long-term prospects of Macau, some investors see Melco Crown Entertainment as a more speculative play in the sector and prefer more established operators. And with the Chinese government's history of restricting visits to the region and recent signs that it may try to cool the fast-growing market, changes in policies could dramatically alter Melco Crown Entertainment's business.

What's your call?
Overall, nearly 96% of the 1,233 CAPS members rating Melco Crown Entertainment see it outperforming the broader market. Because the company faces external risks as well as its internal risks of developing profitable operations, I'm compelled to look elsewhere.

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 free, and you can even add your own insight on any of the 5,400 stocks that our 160,000-plus members have covered.

Motley Fool Global Gains is another Foolish resource to help you find promising opportunities beyond our borders. Check out what stocks the team there is using to beat the market by 11 points free for 30 days.

Since getting some new sneakers, Fool contributor Dave Mock is showing a little more spring in his step, too. He doesn't own shares of companies mentioned here.Melco Crown Entertainment is a Global Gains choice. The Fool's disclosure policy sometimes gets wound too tight and needs a deep-tissue massage.