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Extra6/23/2009 12:01 AM ET

5 stocks poised to bounce back

Investors' collective wisdom can help you find stocks capable of recuperating after a precipitous fall. One candidate, Zoltek, makes carbon fibers found in wind turbines.

By The Motley Fool

However hard the market slams a stock, there's always a chance the company will address its problems, perceptions will change and its share price will come storming back.

Identifying companies ready to rebound is one way an investor can repair a trampled portfolio.

We'll consult our MSN CAPS community for help in finding beaten-down companies that should readily make up lost ground as the economy improves. We'll pinpoint stocks with four- and five-star ratings from CAPS participants, suggesting that the 132,000-strong investment community is confident that the stocks will outperform the market in months ahead.

CAPS is organized to help investors make better investments. Each stock's CAPS page has a wealth of information; you can find a company's financial reports, scrutinize key data and charts and examine the comments your fellow investors have made. Turn to member blogs for insight and opinion. And the CAPS stock screener tool lets you find companies that satisfy your investment criteria.

Here are some of the stocks that meet our criteria today:

Looking up?
CompanyIndustry52-week price changeIncome growth past 12 months

Caterpillar

Farm and construction machinery

-53%

-112%

Foster Wheeler

Construction and engineering

-56%

-47%

Taser International

Electronic control devices

-21%

-138%

U.S. Steel

Steel

-79%

-287%

Zoltek

Carbon fibers

-68%

-89%

A growth trajectory

When cell phone towers began springing up in neighborhoods across the country, the paranoid among us feared our brains would be fried by their electromagnetic frequencies.

Similarly, some folks believe wind farms could pose health hazards. According to one researcher, the spinning of gigantic turbines emits inaudible sound waves, and the rhythmic movements cause vibrations resulting in "wind turbine syndrome," with health effects that may include heart palpitations, high blood pressure, dizziness and a continuous ringing in the ears.

As if the wind-farm business needed any more problems. Activity in the industry has slowed to a near standstill as developers wait to see what kind of financial backing the federal government will give to wind power.

Zoltek (ZOLT, news, msgs), whose carbon fibers are used by wind-turbine manufacturers, reported first-quarter earnings that didn't exactly set hearts aflutter. Revenue fell by 27%, and the St. Louis company barely made a profit.

But Zoltek sees the its business resuming its growth trajectory next year.

Zoltek's largest customer is Vestas Wind Systems (VWDRY, news, msgs), one of the world's largest wind turbine makers, with a 20% market share and some 38,000 turbines installed since its first one went up in 1979. The Danish company accounted for 40% of Zoltek's business last year.

Vestas this year is investing $350 million in its Chinese production facilities to meet growing demand in the world's most populous nation. The Chinese government is putting its financial clout behind alternative energy; the WorldWatch Institute says China could soon surpass the United States, Europe and Japan to become the largest consumer of renewable energy.

Beijing is investing $14.6 billion with the aim of doubling wind turbines' capacity to generate electricity. China Longyuan Electric Power Group, which controls about 25% of the nation's wind-power infrastructure, wants to boost its wind capacity to 6,000 megawatts by 2010 and to 20,000 megawatts in the next decade.

President Barack Obama has said he wants $15 billion a year allocated over the next decade to promote wind and other clean energy resources. Analysts estimate the U.S. wind energy market at more than $151 billion.

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Green investing © Bob Jacobson/Corbis
The winds of change
The Obama administration is emphasizing so-called green jobs as a way to blunt the recession. What does that mean for wind power? (Jan. 16)
Zoltek also has exposure to the aerospace industry: Its carbon fibers are a component of aircraft brakes. But Zoltek is less reliant on the aerospace industry than rivals such as Hexcel (HXL, news, msgs), and it may be better positioned to ride the wind energy trend.

CAPS All-Star "rofgile" thinks that the share price (the stock closed at $9.86 on June 22) is a nice entry point for investors looking for "a wind power play."

What's your take on Zoltek or other stocks that could be ready to bounce? Visit CAPS and let your voice be heard. There's value in a system that incorporates the knowledge, information and skills of thousands of participants.

This article was reported by Rich Duprey for The Motley Fool.

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