5 All-Star Stocks on Fire

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 Kobe 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 a starting lineup 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.

Stock

12-Month Change

Percent Below 52-Week High

CAPS Rating (out of 5)

Foster Wheeler (Nasdaq: FWLT  )

222.3%

1.9%

*****

Arcelor Mittal (NYSE: MT  )

93.6%

3.5%

*****

China Medical Technologies (Nasdaq: CMED  )

87.4%

2.5%

*****

Ctrip.com (Nasdaq: CTRP  )

83.7%

1.8%

*****

Schlumberger (NYSE: SLB  )

69.3%

2.2%

*****

Sources: Yahoo! Finance, Capital IQ, and CAPS as of Sept. 17.

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.

An energy angle
With crude oil higher than $80 per barrel, it may not be surprising that we have some representatives of the industry on today's list. For those who are tired of hearing about major integrated oil companies like Exxon (NYSE: XOM  ) or drillers like GlobalSantaFe (NYSE: GSF  ) , engineering specialist Foster Wheeler could be an interesting way to get some exposure to what's happening in the energy markets.

Foster Wheeler operates in two business groups: global engineering and construction (Global E&C) and global power. The Global E&C group, which made up about 63% of the company's total 2006 revenue, provides a variety of engineering, consulting, and project management services to its clients. Though Foster Wheeler isn't running after black gold itself, a major component of its client base is oil and gas companies, and it provides its services for projects like oil and gas process facilities and oil refineries.

The global energy boom has lit a fire underneath Foster Wheeler over the past couple years, and revenue for the 12 months ending June 29 was more than double the company's revenue for 2005. At the same time, profit margins have expanded and operating income has increased more than threefold in the same time period.

Some of CAPS' top players have been very positive on the stock. One of them, forbes10, gave the stock a thumbs-up in February of this year and called it "a gift" at $55 per share. He expected that the stock would hit $100 in a year -- a price the stock ended up breaking back in May.

PopsDaniecki is similarly optimistic and gave the stock an outperform rating in late July. While he noted that "the value is pretty much already priced into this issue," he also said that "the growth/sales numbers remain impressive enough to count on continued appreciation."

So does Foster Wheeler deserve a place on your All-Star team? You can share your thoughts or check out more of what your fellow Fools have 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 5,000 other stocks that are rated on CAPS.

I think I heard a "booyah" somewhere out there -- thanks, Stuart Scott!

More CAPS Foolishness:


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