3 Stocks Bucking the Downtrend

Even on the market's worst days, buyout news and other short-term forces can send individual stocks up by 10%, 25%, even 50%.        

For example, shares of Silver Standard Resources (NASDAQ:SSRI) snapped back more than 32% on a day when precious metal prices rallied because of the Fed rate cut last week.

But beyond less predictable events like that one are stocks with fundamentally compelling reasons for recent momentum. 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. Let's use the collective wisdom of more than 120,000 CAPS members to filter out the noise and find companies offering strong momentum.

We'll use CAPS' handy stock screening tool to quickly zero in on companies with a stock price increase of at least 15% in the past four weeks, a market cap of greater than $100 million, and a beta of less than 3.

Here's a sample of stocks our CAPS screen returned:

Source: Motley Fool CAPS. Price return from Oct. 3 through Oct. 31.

Steel is hot again
Over the past several months, falling commodities prices have resoundingly smacked shares in all sorts of raw materials suppliers -- from gold and copper companies like Yamana Gold (NYSE:AUY) and Freeport-McMoRan (NYSE:FCX) to steelmakers like Nucor. But Nucor's nearly 50% plunge in the past six months leaves many investors -- and even a Wall Street analyst -- seeing tremendous fundamental value in shares.

The recent pessimism gave way to more buying when Nucor, one of the largest U.S. steelmakers, reported third-quarter earnings a few weeks ago. The company brought $735 million to the bottom line, nearly double that of the third quarter a year ago, beating analysts' expectations. And while management decided that the market is too volatile to project earnings even for the next quarter, it does expect another record year for 2008, because of a strong competitive position domestically and abroad. The environment also presents more opportunities for consolidation, and management says it's considering using its strong cash position to take advantage of others' beaten-down share prices.

Nucor CEO Dan DiMicco says there will certainly be short-term volatility in the steel sector, but he maintains a long-term bullish outlook. The company pays a solid base dividend, and there's also potential for the supplemental dividend that is paid out when business is strong. In CAPS, more than 96% of the 1,453 members rating the company expect it to outperform the market.

Gaming growth
Finding refuge from a slump in domestic gambling that gaming companies like MGM Mirage or Wynn Resorts (NASDAQ:WYNN) are exposed to, Melco Crown Entertainment operates one of the top casinos in Macau, where gaming revenue has been strong. But that hasn't kept investors in the company free from worry; many feared its massive new "City of Dreams" development could be affected.

But shares in the Hong Kong-based company soared when officials recently told investors that the economy will not have an effect on the new resort, still set to open in the first half of 2009 in Macau. The company said it has plenty of financial resources to work with and will work at maximum capacity to open on time.

Even though the casino industry and China recently experienced a sell-off -- giving Melco shares a double whammy -- many CAPS members feel that the company will still perform well, even with the risks facing it. Nearly 96% of the 1,070 CAPS members rating Melco expect it to beat the market.

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 120,000-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.