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 data storage company 3PAR jumped 86.5% last Monday after it was announced that Dell would buy the company for $1.15 billion in cash.

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.

Source: Motley Fool CAPS. Price return from July 23 through Aug. 20.

Mosaic
Good times are rolling again for agriculture company Mosaic as its fiscal fourth-quarter profit more than doubled helped by a 17% increase in revenue and higher margins. And with BHP Billiton (NYSE: BHP) looking to benefit from a rising demand for crop nutrients with a huge takeover offer for PotashCorp (NYSE: POT), a number of fertilizer producers, including Mosaic, saw their shares shoot higher as speculation swirled about more merger and acquisition activity in the sector. Despite a recent downgrade from JPMorgan and the higher valuation on shares today, CAPS members still give Mosaic a four-star rating as 96% of the 2,497 CAPS members rating Mosaic expect it to beat the broader market.

China Marine Food Group and China Agritech
China's growing middle class is increasing demand for a variety of food products, from pork products to snack foods and soft drinks. China Marine Food Group has been taking advantage of this new trend by increasing its retail footprint for its salty seafood snack products and Hi-Power algae-based beverages, a move that has helped it generate an 87% jump in second-quarter revenue and an 83% increase in earnings. Some CAPS members have reservations about the risks of investing in a Chinese small-cap stock, but many think the potential reward outweighs the risk and remain bullish on its growth potential, with 97% of the 629 CAPS members rating China Marine Food Group bullish on its chances to outperform the market averages.

The increasing Chinese appetite is also good news for those farther down the supply chain, including Chinese agriculture companies. Hog producer AgFeed Industries (Nasdaq: FEED) saw first-half production nearly double in its animal nutrition division, while fertilizer company China Green Agriculture (NYSE: CGA) looks to increase its sales volume by 40% over each of the next two fiscal years. China Agritech has seen the organic food market flourishing as more farmers are seeking out organic fertilizers and consumers seek higher quality foods. Its financials tell the story well – China Agritech's second-quarter net revenue grew 63%. Investors aren't overwhelmingly sold on this growth opportunity though as the CAPS community has recently knocked the stock back to a two-star rating with 90% of the 228 members rating China Agritech believing it will 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.