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

Investors should consider buying stocks after a big decline, when pessimism has unduly beat good companies down to great prices. That's why we here at the Fool -- and 140,000-plus 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 for 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. Once we've rounded up our candidates, we can use all the information in CAPS to test whether each company has already hit bottom, or simply primed shareholders for further pain.

I've used the CAPS screener to filter out $100-million-plus companies that have recorded at least a 20% jump in share price in the past 13 weeks, even while remaining at least 40% below their 52-week high. These stocks also have both a positive return on equity and earnings per share over the last 12 months. This limits 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.


CAPS Rating
(out of 5)

Price Change

% Below 52-week High

Kansas City Southern (NYSE:KSU)




Huntsman (NYSE:HUN)




NorthStar Realty Finance (NYSE:NRF)




General Electric




Callaway Golf




Source: Motley Fool CAPS. Price return from June 19 through Sept. 14.

The bottom case
Some investors argue that there are a few big reasons why Kansas City Southern may be looking nowhere but up today. According to the Association of American Railroads, U.S. rail shipment volume has continued to show steady improvement. In the last week of August, railcar loadings reached the highest weekly level since mid-December of 2008. Kansas City Southern has seen signs of stabilization in the U.S. and Mexico, and it recently completed a new 90-mile rail line in Texas, which will provide more efficient access to both markets. Other industry executives from companies like Union Pacific have also reflected on improving signs, and many CAPS members like the opportunity to buy overlooked stocks in a beaten down sector.

Or dead cat in disguise?
Even though Kansas City Southern and other rail operators may be improving somewhat, industry rail shipments are still down more than 18% from last year. Like peers Norfolk Southern (NYSE:NSC) and Canadian Pacific Railway, Kansas City Southern recently reported sharp year-over-year quarterly declines in earnings and revenue, driven by lower demand. A few hopeful signs are still very different from a full recovery; it may take the industry time to achieve any substantial growth. A recent rally in Kansas City Southern's shares makes one UBS analyst think that earnings pressure will put the brakes on further gains. Meanwhile, cheaper alternatives like CSX (NYSE:CSX) and Berkshire Hathaway favorite (NYSE:BRK-B) Burlington Northern Santa Fe (NYSE:BNI) earned upgrades from R.W. Baird.

What's your call?
Overall, 98% of the 378 CAPS members rating Kansas City Southern see the stock outperforming the broader market. Personally, I think the recent rally in shares has made the stock far less attractive as a value play. But while Motley Fool CAPS can help inform your decisions, the final opinion's always up to you.

The Motley Fool Stock Advisor service looks for companies with strong management poised to beat the market over the long haul. To see all the stocks that have helped Tom and David Gardner beat the market by 48 points on average, take a free 30-day trial.

Since getting some new sneakers, Fool contributor Dave Mock is showing a little more spring in his step, too. He owns no shares of companies mentioned here. Berkshire Hathaway is a Stock Advisor selection as well as an Inside Value recommendation. The Fool owns shares of Berkshire Hathaway. The Fool's disclosure policy sometimes gets wound too tight and needs a deep-tissue massage.