5 Stocks Springing Back

With all the volatility in the markets today, there's no shortage of market seers attempting to call a bottom. Ben Bernanke called a bottom not once, but twice. Heck, even Keanu Reeves laid out what a world-ending market bottom looks like.

And investors should consider buying stocks in decline, when pessimism has unduly beat good companies down to great prices. That's why we here at the Fool -- and 140,000 investors like us -- look to the Motley Fool CAPS community to help sniff out the real opportunities from languishing companies driven by speculation.

Real bottom or another leg down?
Of course, there's no foolproof method of timing a market bottom. But CAPS has a great balance of both quantitative and qualitative resources available on 5,300 stocks, and even a nifty stock screening tool to help investors quickly zero in on potential investment opportunities. Then we can use all the information in CAPS to test whether an individual company has already seen its bottom, or has just primed shareholders for further pain.

I've used the CAPS screener to filter out $100-million-plus companies that have seen their stock price appreciate by at least 20% in the past 13 weeks, even while they remain at least 40% below their 52-week high. These stocks also have both a positive return on equity and earnings per share over the past 12 months. The aim is to limit the results to companies that have a history of delivering results regardless of stock gyrations. If you'd like, run this screen yourself -- just keep in mind that results may change as the market does.

Here are a few of the results this week:

Source: Motley Fool CAPS. Price change from June 5 through Sept. 4. The Sept. 4 price was compared to the 52-week high.

The bottom case
I notice several reasons why Textron may be seeing brighter days ahead. Similar to rivals Bombardier and General Dynamics (NYSE:GD), Textron is seeing signs of stabilization in the business-jet market and said it's seeing modest improvement in new orders of Cessna business jets, its largest source of revenue.

Its defense business continues to grow as well, with strong demand for its unmanned aerial vehicles that companies such as Northrop Grumman (NYSE:NOC), Honeywell (NYSE:HON), and Raytheon (NYSE:RTN) are also looking to capitalize on. It has improved liquidity with newly established credit facilities and even retired some debt early, generating savings on interest. It also raised its 2010 cash balance outlook to about $1.5 billion, from $224 million.

Or dead cat in disguise?
But not everyone is revved up on Textron's turnaround. Some CAPS members still see pressure in the business-jet market and, similar to General Electric's (NYSE:GE) or Harley-Davidson's noncore finance units causing trouble, its financial business has been a drag on the company.

Although it's making progress toward liquidating assets in its financial business, revenue in the finance arm fell nearly 19% in its recent quarter, while overall revenue dropped 29%. Reduced jet deliveries prompted it to cut its full-year revenue forecast, and a recently filed lawsuit against the company could become a distraction.

What's your call?
Overall, 92.3% of the 575 CAPS members rating Textron are bullish and see it outperforming the broader market. For my part, I see Textron as a solid company, though not a bargain at today's prices. But what ultimately counts is your own opinion -- CAPS is just there to help you form it. The best part is that the Motley Fool CAPS database is all free, and you can even add your own insight on any of the 5,300 stocks that our 140,000-plus members have covered -- whether it's related to expired felines or not.