When the clock's ticking down and the game's on the line, which of your teammates do you trust to sink a winning shot? Sure, you could dish the rock to your resident superstar -- but what if he's playing ice-cold at the moment? So instead, you pass to the guy with the hot hand, the one who'll be deemed en fuego tomorrow on ESPN.
Momentum investors are looking for stocks in a similar state of sizzle. But momentum by itself will only get you so far. I prefer to find high-quality stocks that also have some positive inertia on their side. It's like kicking the ball out to your team's superstars when they do have a hot hand.
To find these league-leading winners, I cross-referenced a simple momentum screen with data from The Motley Fool's CAPS investing community. Each of the companies below is up 30% or more over the past year, now trades 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
|
|
Kinross Gold (NYSE: KGC )
|
111%
|
0.0%
|
*****
|
|
Agrium (NYSE: AGU )
|
106%
|
4.5%
|
****
|
|
Goldcorp (NYSE: GG )
|
78%
|
2.5%
|
****
|
|
Occidental Petroleum (NYSE: OXY )
|
73%
|
3.2%
|
*****
|
|
Copart (Nasdaq: CPRT )
|
46%
|
2.3%
|
*****
|
Sources: Yahoo! Finance, CapitalIQ, and CAPS as of March 3.
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.
The church of what's working now
Ticking down the list of stocks above you can get a pretty good sense for where the recent market action has been. With uncertainty in the economy and stock market running high, investors have turned to what seems like the current sure thing -- high commodity prices. Oil, coal, metals, and grains have all been running up as the dollar depreciates against most of the world's currencies and global demand continues to stretch current supply.
But will the church of what's working today still work tomorrow? Commodity fans seem to be everywhere these days, and I've been hearing gold mentioned a lot lately as an essential part of an investor's portfolio. These investors cite continuation of many of the supply and demand drivers that have led to current high prices in commodities as reason to be bullish today. But there are also investors on the other side of the fence who think this could be a commodity bubble -- all that's gold may not glitter.
On CAPS, we can find a little bit of both sides. Though Kinross is a very well-liked stock -- it has 629 bulls versus just 23 bears on CAPS -- there are those, like CAPS All-Star chuckpin, who have their doubts: "Commodities have been so inflated and with a slowing economy, they will eventually return to normal levels-anticipated by 2009."
There are likewise those that see mostly short-term opportunity. All-Star sslstudios is a Kinross bull, but said, "I believe there is a commodities market ... going up for at [least] a year. So I will ride the wave and jump off when it hits the top."
And of course there are the out-and-out bulls like yippiekiyeh, who has scored 119 points on his Kinross pick (so far!) and noted:
With the world's standard fiat money headed to lowest value in decades, precious metals are worth their weight. Look for this trend to continue for a awhile as the world sorts out which currency is going to be in charge. (Euro? Yuan? Ruble?)
So do you think commodity stocks 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 take a peek at a few more of the 5,400 other stocks that are rated on CAPS.
I think I heard a boo-yah somewhere out there -- thanks Stuart Scott!
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