However hard the market slams a stock, there's always the chance it'll come bouncing right back. We'll consult our Motley Fool CAPS community to find shares on the rebound, examining one specific sector of the economy in search of companies with top CAPS ratings.        

Among the more than 1,500 stocks listed under "financials" in the CAPS screener, we've unearthed a few with five-star ratings. That means some of our 140,000 CAPS members are confident that these stocks will beat the market in the months ahead; let's see what members are saying about the five below:

Company

CAPS Rating Today

Recent Price

52-Week Price Change

Estimated Long-Term Growth Rate

Compass Diversified Holdings (NASDAQ:CODI)

*****

$10.47

(29%)

11%

Rodman & Renshaw Capital Group (NASDAQ:RODM)

*****

$6.02

287%

NA

Harris & Harris (NASDAQ:TINY)

*****

$6.25

8%

30%

Marsh & McLennan (NYSE:MMC)

*****

$24.73

(18%)

10%

Safeguard Scientifics (NYSE:SFE)

*****

$10.97

60%

NA

Sources: Motley Fool CAPS and Yahoo! Finance.

While some companies in the financial sector have obviously fared better than others -- Rodman & Renshaw has almost quadrupled in value, and payday lender Advance America (NYSE:AEA) has more than doubled -- the average stock lost more than 6% year over year. Let's see why investors might think that some of these companies are on the rebound.

Some spring in its step
Even in a frothy market such as the one we've seen recently, Rodman & Renshaw's returns are eye-popping, particularly for an investment banker. This underwriter, though, has chosen to play in the biotech sector at a particularly opportune time. As CAPS All-Star TMFHelical notes, Rodman & Renshaw is a "low end finance provider specializing in PIPES to biotech / health care (that) is seeing a large resumption in activity."

Biotechs are using the opportunity of higher stock valuations to hit investors up for additional cash, and Rodman & Renshaw is underwriting many of the top names you've been reading about, such as Cell Therapeutics (NASDAQ:CTIC), Vical, and Spectrum Pharmaceuticals.

It's not surprising that these companies are turning to Rodman & Renshaw, a leader in PIPE financing. "Private investment for public equity" becomes more common when traditional equity markets dry up. With a dearth of credit available, companies wanting to raise capital have turned to private investors for their funds. PIPE transactions allow the investors to purchase stock in a company directly at a set price. These deals are attractive to companies because they are quickly completed and announced after the transaction is done.

Building these PIPEs has been a lucrative business for Rodman & Renshaw, the top-ranked investment bank in PIPE transactions. Its revenue soared to $33.4 million in the second quarter, a vast improvement over $5.8 million for the first quarter. The company also reported a profit of $15.9 million in the quarter, up from a first-quarter loss of $12.3 million. Rodman & Renshaw also completed 25 financing transactions for the quarter -- five times more than it did earlier in the year -- raising nearly $400 million.

This probably helps explain why both Harris & Harris and Safeguard Scientific, two venture capital firms, also bucked the trend and reported gains year over year. Compass Diversified, on the other hand, acts more like the private investors Rodman & Renshaw matches up with companies; it acquires a controlling interest in profitable businesses operating in attractive niche industries. That requires a more precise investment strategy, and it may turn up losers once in awhile. As for Marsh & McLennan, its consulting services have been frustrated by the ongoing recession.

The ball's in your court
There are many factors that go into whether a stock is a buy or a sell, so it pays to start your own research on these stocks on Motley Fool CAPS. 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. Head over to CAPS today and share your thoughts with other members on whether you think these stocks are ready to go higher.

Harris & Harris Group is a Motley Fool Rule Breakers selection. Marsh & McLennan is an Inside Value recommendation. Try any of our Foolish newsletter services today, free for 30 days.

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