5 Stocks Breaking Out

Volatile markets seem to be the norm these days, as stocks gyrate through ups and downs on a daily basis. But sometimes buyout news and other short-term forces can send individual stocks soaring by 10%, 25%, even 50% -- even on the market's worst days.   

For example, shares of Dendreon rose 27% a week ago last Thursday, after the FDA approved its pricey prostate cancer vaccine Provenge.       

But beyond less-predictable events like that one are stocks with fundamentally compelling reasons behind a big move. The trick lies in finding 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. We can use the collective wisdom of more than 160,000 CAPS members to filter out the noise and find companies with strong potential.

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. Then we can use the insight of the CAPS investment community to add some context to these market movers.

Source: Motley Fool CAPS. Price return from April 9 through May 7.

Sturm, Ruger
While firearm peer Smith & Wesson (Nasdaq: SWHC) disappointed Wall Street with lower-than-expected revenue guidance in its most recent quarterly report, Sturm, Ruger, posted a jump in first-quarter sales and earnings. Setting itself apart, the company believes it gained market share from its main competitor, on top of reporting that it grew its backlog. It sits on a debt-free balance sheet, and with an innovative lineup of products, some CAPS members think it's in a good position to weather any softening of firearms sales. As such, roughly 92% of the 364 CAPS members rating Sturm, Ruger expect it to outperform the market.  

VIVUS
VIVUS has a lot riding on its obesity drug Qnexa, which has potentially huge profit potential due to the size (sorry) of its target market. Along with competitor Arena Pharmaceuticals (Nasdaq: ARNA) -- who is hoping to grab a piece of the lucrative niche with its own lorcaserin -- VIVUS is still waiting for an FDA decision for the drug. Qnexa is up for an FDA expert panel review in July, and many expect to hear a decision on both drugs by October. Some investors and analysts are already prognosticating on the future though -- one Brean Murray Carret analyst is betting on an approval in October and his recent buy recommendation helped trigger a rally in shares. About 91% of the 296 CAPS members rating VIVUS now see it is as a market-beating investment.  

Federal Agricultural Mortgage
While Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) continue to struggle with increasing delinquency rates on their loan portfolios, peer Federal Agricultural Mortgage (Farmer Mac), which focuses on the relatively more stable agricultural real estate financing, has seen its shares on a tear. The government is still keeping the residential mortgage pair from going under as Freddie Mac recently requested another $10.6 billion in government bailout, yet Farmer Mac has seen its non-performing assets and 90-day delinquencies trending down and reported a fourth-quarter profit. But with a one-star rating in CAPS, few members see potential in its shares at this point with only about 61% of the 64 members rating Farmer Mac believing it will beat the S&P.   

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 160,000-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.