Since the days of Aristotle, stories have been told in three parts. We see the setup, the confrontation, and finally the resolution. The third act has always been my favorite. All the tension we've been building toward is finally released, and in a way that is usually a great benefit to the hero. You'll see this phenomenon in great cinematic masterpieces like Return of the Jedi, Return of the King, or Return of the Killer Tomatoes.

Sometimes, real life can behave like a well-scripted story. A once-cherished stock can fall on hard times, only to recover to its former glory. For example, take a look at Allergan (NYSE:AGN). This multi-specialty health-care company had a five-star CAPS rating one year ago, dropped as low as three stars, and has recently worked its way back up to five-star status. Five-star stocks have outperformed the market by 12% since we began tracking them in late 2006.

Using the CAPS screener, we can further leverage the knowledge of the Motley Fool CAPS investor community. I ran a screen for stocks that were rated four or five stars a year ago, dropped to one to three stars three months ago, and are back in the four-to-five-star range today. Here are some of the results.

Company

Current Price

12-Month Return, Ending 8/08/07 (4 or 5 Stars)*

Return From 8/08/07 to 5/08/08 (1 to 3 Stars)*

Return from 5/08/08 to 8/08/08 (4 or 5 Stars)*

Allergan

$57.40

23%

(18.5%)

7.3%

Allianz SE (NYSE:AZ)

$17.13

40.7%

(9.9%)

(11%)

Ivanhoe Mines (NYSE:IVN)

$10.15

127%

(33.6%)

11.7%

Macquarie Infrastructure Company (NYSE:MIC)

$21.57

71.7%

(28.6%)

(28.7%)

SEI Investments (NASDAQ:SEIC)

$24.48

4.2%

(9.1%)

4.7%

Sonic Corp (NASDAQ:SONC)

$16.57

18%

(4%)

(27.5%)

Vertex Pharmaceuticals (NASDAQ:VRTX)

$29.27

25.9%

(31.1%)

8.9%

Data provided by Motley Fool CAPS. Prices as of Aug. 11, 2008. *CAPS star ranking on the last day of stated period.

Remember, a screen is just the first act in the stock-selection process, building through due diligence before the final resolution of a decision to buy or pass. The companies above may be an enticing list to start with, as four of the seven stocks seem to have gone back to their winning ways. Want to discuss these picks or suggest some of your own? Head on over to the 115,000-member Motley Fool CAPS community today. Who knows, maybe you could win an Academy Award for best (portfolio) director.

Tony Arsta does not own shares in any company mentioned. Vertex Pharmaceuticals is a Motley Fool Rule Breakers pick. SEI Investments is a Stock Advisor selection. The Motley Fool's disclosure policy prefers The Empire Strikes Back.