More Than Momentum: Stocks Rising for a Reason

Even on the market's worst days, headlines and ticker feeds tout soaring stocks. Some juicy rumor or biotech wonder drug seems to be reason enough for a stock to climb 10%, 25%, even 50% -- sometimes in a single day. Sometimes, the companies are familiar, but many are names and stories entirely unknown to investors.

Often, news of a buyout offer sends a stock rocketing, like Danaher's (NYSE:DHR) $2.8 billion bid for test equipment maker Tektronix (NYSE:TEK), which caused the latter's stock to rise nearly 34% in a single day. But beyond these somewhat unpredictable surges, there are stocks out there with a fundamentally compelling story behind their recent momentum. The difficulty comes in sifting through the daily trading and news-driven gyrations to find them.

Luckily, there's help right at your fingertips. Motley Fool CAPS is a great tool not only for finding and screening stocks, but also for getting the background.

The story behind the story
Let's dig right in, using the collective wisdom of more than 70,000 CAPS investors, to look past the splashy news and find companies showing strong recent momentum.

We'll screen for stocks showing at least 30% price appreciation in the past month. Then we'll weed out stocks with less than a $100 million market capitalization and those with a beta greater than 3. Setting these limits will help keep us out of the wild, pump-and-dump land of penny stocks.

Here, then, is a broad sampling of stocks that our screen returned today.

Now let's sift further through this list of stocks that have thumped the market over the past month and find out why they've performed so well.

The method behind the madness
CAPS contains a searchable record of investors' opinions and comments about a company, as well as an overall ranking from the investing community. Lest you think that this sounds like following a crowd of lemmings, note that the opinions of the best-performing investors are weighted more heavily than those from poorer-performing investors. Thus, a company's ranking is influenced more strongly by investors who have proven themselves to be better than the average dart-throwing monkey.

High-octane investing
Combustion system technology company Fuel-Tech offers boiler optimization and air pollution reduction and control systems to power-generation utilities and industrial companies. Fuel-Tech had its own shares burning up the tape this past month, mirroring a comparable drop the month prior. After the release of second-quarter results that showed an 18% drop in revenue, shares of the company were steadily bid down to where contrarian investors lurk.

Management blamed lackluster results for the first half of the year on delayed contracts and the winding up of operations that generated significant revenue in 2006, such as two air pollution control contracts in China. But news of a few new contracts being awarded in the last few weeks has helped restore investors' confidence in management and pushed shares higher. CEO John Norris also went beyond the beefed-up backlog at the company and further enticed investors with claims that the company anticipates "signing additional air pollution control contracts in the weeks ahead."

What's your story?
Ultimately, the only story that counts is your own. Whether you buy the story of a soaring or souring stock, your own research is more important than collective opinions. But these collective opinions make an individual's due diligence much easier.

So step right up and chime in with your own take on these or any of the more than 5,100 stocks that investors have covered in Motley Fool CAPS. It's totally free to be a part of this story, and the payback is more than worth it.