These Stocks Are Bouncing Back

However hard the market slams a stock, there's always the chance it'll come bouncing right back. We'll consult our Motley Fool CAPS community to find shares on the rebound, examining one specific sector of the economy in search of companies with rising CAPS ratings.          

There are 278 stocks listed under "drugs" in the CAPS' screener. We've found more than a few well-respected members of that bunch, sporting four- or five-star ratings. Those accolades signal our 165,000 CAPS members' confidence that these stocks will beat the market in the months ahead. For now, let's see what members are saying about the ones below:

Source: Motley Fool CAPS; Yahoo! Finance, as of June 17.

Until the market hit the panic button, the broad market averages had staged a pretty bold recovery -- but the S&P 500 is still up 24% over the past year. CAPS drug stocks have fared even better, with average returns of roughly 40% year over year. Of course, those overall returns had some help; Human Genome Sciences (Nasdaq: HGSI) soared more than 900%, and Somaxon Pharmaceuticals (Nasdaq: SOMX) jumped 363%, over the past year.

Let's take a closer look at why investors think that some of these other companies won't be jumping from the frying pan into the fire, now that the market has fallen from its lofty heights.

Some spring in its step
You'll hear a lot of people complain they suffer from rheumatism, though it's more of a colloquial description than a medical diagnosis. I can personally attest that when the rains are coming, my hip knows it.

Rheumatoid arthritis (RA), on the other hand, is a medical condition characterized by inflammation of joints, tissues, and organs -- and a prize target for most of the major drug manufacturers. Pfizer markets Celebrex and Enbrel; Bristol-Myers Squibb has a number of candidates in testing, but most prominently offers Orencia for treatment. Johnson & Johnson (NYSE: JNJ), Abbot Labs (NYSE: ABT), Roche, and others all have therapies out there. Arthritis drugs in general were a $35 billion market in 2008, and RA accounted for $10 billion in worldwide sales of protein therapeutics last year, so it's understandable why so many drug companies would pursue it.

Drugmakers are still looking for more treatments, too. Pfizer has teamed up with Trubion Pharmaceuticals to develop treatments; while Trubion suffered a setback on one drug, a second is still in mid-stage clinical studies.

Of course, arthritis isn't Big Pharma's only focus. Cancer therapies are another hot area, and Bristol's acquisition of Medarex last year gave it access to the pharma's ipilimumab, a potential wonder drug in the field. In fact, CAPS member DelRio78 thinks that little purchase alone is the best reason to get into Bristol these days:

Do a little research on a novel compound that [Bristol-Myers] calls ipilimumab, try to discover why [Bristol-Myers] absorbed Medarex, and see if you come to the same conclusion that I do. [Bristol-Myers] knows something about the future of the drug, and it could be HUGE!

Pfizer is also targeting cancer, and its lung cancer treatment crizotinib looks to be treating patients fairly well. CAPS member gimponthego says the pharma king has a couple of hot prospects, which, when coupled with a solid base of drugs to build on, makes it a good investment as well:

With two strong irons in the fire and solid fundamentals, not to mention an affordable price (you can buy a bunch) I really like Pfizer.

International markets are smokin'
SciClone Pharmaceuticals has also been dabbling in cancer research. However, its mid-stage studies on drug chemotherapy side-effect treatments underwhelmed the market, since they didn't present a statistically significant change. Its hepatitis B treatment Zadaxin continues to sell well in China, however, and with first-quarter profit for SciClone beating expectations, it's reaffirmed its full-year outlook.

Roughly 94% of the CAPS members rating SciClone believe that the drug maker will go on to beat the broad market averages. Why not give us a dose of your opinion on the SciClone Pharmaceuticals CAPS page?

The ball's in your court
Many factors go into whether a stock is a buy or sell, so it pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. Head over to CAPS today, and share your thoughts with other investor analysts on whether you think these stocks are ready to bound higher.