The clock's ticking down, your team's down one, you're being double-teamed, and you wouldn't have enough time to get off a good shot even if you were allowed to drop-kick both defenders. So who do you dish the rock to?
Your first thought might be the resident superstar -- the Kobe Bryant or LeBron James. But what if Kobe, as good as he is, is playing colder than an Alaskan snowdrift? That's right, you dish to the guy with the hot hand, the guy who will be deemed en fuego tomorrow on ESPN.
Momentum investors are looking for stocks in a similar state of sizzle when they make investments. They want to give the nod to the stocks that are hot to the touch.
But momentum by itself will only get you so far. What sounds more interesting to me than simply looking for stocks that have momentum is finding high-quality stocks that also have some positive inertia on their side. It's like kicking the ball out to Michael Jordan or Larry Bird when they do have a hot hand.
To find these high-quality winners, I cross-referenced a pretty simple momentum screen with data from The Motley Fool's new investing community, CAPS. The result is starting line-up of all-star stocks that all currently have a fiery shooting hand. Each of the companies below is up 30% or more over the past year, is within 5% of its 52-week high, and has been rated highly by CAPS players.
|
|
12-Month Change
|
Percent Below 52-Week High
|
CAPS Rating
|
|
EMC (:EMC)
|
75.7%
|
1.8%
|
*****
|
|
NVIDIA (:NVDA)
|
80.1%
|
1%
|
*****
|
|
Aluminum Corp. of China (NYSE:ACH)
|
299.2%
|
3.4%
|
*****
|
|
China
Mobile (NYSE:CHL)
|
114.5%
|
1.3%
|
*****
|
|
GameStop (NYSE:GME)
|
128.9%
|
2.3%
|
*****
|
Sources: Yahoo! Finance, CapitalIQ, and CAPS as of Aug. 27.
At first glance this sure looks like a high quality group. But, as always, I highly advise taking a close look before you throw a bounce pass in the direction of any of these stocks.
What a difference a week makes!
Last week I lamented that it was difficult to dig up a selection of high-quality stocks that were headed in the right direction. This week is another story. With the S&P back up 1.5% over the past week, some of the best stocks in the market have found themselves posting gains again.
If you're not a hardcore gamer (video game player that is) or somebody that gets a kick out of cracking open computers, the name NVIDIA may not jump out at you. The company is the worldwide leader in making the graphics processors that you can find churning out the graphics in your PC, Playstation 3, and even your cell phone.
One person that didn't miss NVIDIA was David Gardner, who picked the stock for The Motley Fool's Stock Advisor newsletter two years and 335% ago. He cited the prevalence of the company's chips as well as its strong financial performance -- did I mention that it's been profitable since its 1999 IPO?
Last week the stock benefited from strength in the semiconductor space, as well as some encouraging words from a Longbow Research analyst. The analyst said that NVIDIA is keeping a comfortable lead on AMD (NYSE: AMD ) -- which purchased NVIDIA competitor ATI Technologies last year -- in the graphics space. He claimed that this will allow NVIDIA to both improve margins and deliver growth above the industry average.
CAPS players have come to a similarly bullish conclusion. Of 1,286 opinions on NVIDIA, only 68 expect the stock to underperform. Recent comments on the stock include Willuminati, who believes NVIDIA is the "top player in the industry." Aman00 agrees with that conclusion and said, "Competition from ATI is growing slimmer as time goes by. Go look at any computer sold today in excess of $1,000 and see what kind of video card is in it."
So does NVIDIA deserve a place on your All-Star team? You can share your thoughts on it or check out more of what your fellow Fools had to say about it or any of the other stocks above by stopping by CAPS. And while you're there you can also take a peek at few more of the 4,900 other stocks that are rated on CAPS.
I think I heard a boo-yah somewhere out there -- thanks Stuart Scott!
More CAPS Foolishness:
When it comes to basketball, Fool contributor Matt Koppenheffer might be the guy Ron Shelton was thinking of when he thought of the title White Men Can't Jump. He owns shares of Aluminum Corp. of China, but does not own shares of any of the other companies mentioned. China Mobile is a Motley Fool Global Gains recommendation. GameStop is a Stock Advisor selection. The Fool's disclosure policy has a 55'' vertical jump and can dunk from half court. Or so I hear.
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