3 Righteous Stocks In A Wrong-Way Market

By Aryeh Katz | May 24, 2010 AAA

Since the broad market hit its most recent highs on April 23, the S&P 500, as measured by the SPDR S&P 500 ETF (NYSE: SPY), has fallen by close to 12%. It's the first full-blown, by-the-numbers correction for equities since last March's market bottom (by most definitions a market correction is defined by a pullback of 10% or more from previous highs). Other broad market indexes are also in the red. The Nasdaq has lost nearly 13%, and the Dow Jones Industrial Average is off about 10.5%.

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Yet a great many stocks have powered forward since the April top, tacking on 30% or more since then. Here are three such standouts - companies that have scorned the general market on their way to recent gains:

Nickel And Diming Their Profits

Coinstar (Nasdaq: CSTR) is up nearly 55% since the latest correction began and over 83% in the last quarter. Coinstar reported earnings per share of 21 cents in the latest quarter, against Wall Street analyst expectations of just 13 cents. The company also raised guidance for the coming quarter and full year 2010.

Coinstar is in the business of providing automated retail solutions, predominantly for the sale and rental of movies on DVD. The company also provides self-service, coin-counting kiosks and money-transfer services. The company has over 95,000 machines operating across the U.S. in supermarkets, drug and convenience stores.

Soft Takeover

Sybase (NYSE: SY) offers consumers a variety of software applications to manage and encrypt data as well as mobile messaging capabilities. The company's shares have risen better than 40% in the last month after a takeover bid by German software giant SAP AG (NYSE: SAP) was accepted by the company's board of directors.

In the last year, Sybase shares have gained 95%.

Healthy Buyout

Odyssey HealthCare (Nasdaq: ODSY) shareholders were also the beneficiaries of a recent takeover bid. The company's stock rose better than 35% in the last month's trade after Gentiva Health Services (Nasdaq: GTIV) proposed a $27 per share cash offer for the company. A number of lawsuits are pending in this case.

The Wrap

Even a down market can produce great individual stocks. Outsized earnings surprises and takeover bids are just two means by which shareholders can profit handsomely "against the tide". (Use these seven steps to discover a takeover before the rest of the market catches on. Refer to Pinpoint Takeovers First.)

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