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 in Regions Financial (NYSE:RF) jumped 48% when it acquired $285 million worth of FirstBank Financial Services deposits from the FDIC.

But beyond less-predictable events like that one are stocks with fundamentally compelling reasons for recent momentum. The trick lies in finding them. 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 125,000 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 20% in the past four weeks, a market cap of greater than $100 million, and a beta of less than 3.

Below is a sample of stocks that our screen returned. If you'd like, run this screen yourself -- just keep in mind that results may change as the market does.

Source: Motley Fool CAPS. Price return from Jan. 9 through Feb. 6.

Iron man
Shares of commodities producers like Vale, Yamana Gold, and Barrick Gold (NYSE:ABX) have been on an impressive run over the past few months, as investors grow more encouraged about the long-term prospects for many beaten-down players. CAPS members remain largely bullish on the outlook and demand for Vale's large selection of metals and minerals, despite the current weakness in the global economy. As the world's largest iron ore producer, Vale also recently agreed to purchase a Brazilian iron ore mine and potash assets from Rio Tinto (NYSE:RTP) for $1.6 billion, since debt-laden Rio is under pressure to raise money to pay off debt.

Investors have noted at least one encouraging sign: an increase in demand for iron ore from China. The Baltic dry freight index rose to its highest level since October last week. Ship brokers have also recently seen a dramatic increase in producers such as Vale, Rio Tinto, and BHP Billiton shipping iron ore into China, as the country replaces its depleting iron ore stockpiles. With infrastructure spending remaining a high priority both in the U.S. and China, nearly 98% of the 6,075 CAPS members rating Vale expect it to outperform the market.

Staying solid
Excluding one-time charges, Western Digital reported fiscal second-quarter earnings of $0.55 per share, blowing past analysts' expectations of $0.31. Investors were encouraged by a fiscal performance that surpassed rival Seagate, which posted a wider-than-expected quarterly loss and is struggling with customer disappointment in some of its products. During the quarter, Western Digital was able to efficiently cut costs and scale back production to match the slowing demand, a trend it expects will continue in this difficult economy.

But despite short-term slowdowns in PC and notebook sales, many CAPS members like Western Digital's cash-generating abilities. Also, some think the threat of solid-state drives (SSDs) from companies like SanDisk and Intel (NASDAQ:INTC) is overblown, contending that viable competition from the technology remains distant because of SSDs' relatively expensive current price. In addition, there's always the possibility that Western Digital could join the solid state market itself, should it become viable. As such, 92% of the 927 CAPS members rating Western Digital remain bullish.

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. Still, CAPS' views can make your due diligence a whole lot easier.

Add your take on these or any of the nearly 5,400 stocks that our 125,000-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.