Hot Stocks You're Buying Now

Welcome back to another Foolish review of the hottest stocks as ranked by Motley Fool CAPS. We're looking at the three best-performing industries over the past 30 days and your favorite long and short candidates in each.

Another week at the top for health-care information service providers. The TriZetto Group (Nasdaq: TZIX  ) and its peers are, as a group, up 31.9% over the past 30 days.

There's a good reason for the run-up: Health-care costs are rising. But there's worry among technology pros -- the staffers who buy and install new hardware and software at hospitals, doctor's offices, and the like -- that cutbacks in Medicare could crimp budgets and cut the earnings power of top providers such as SXC Health Solutions (Nasdaq: SXCI  ) . By how much is unclear. But ComputerWorld reports that the Federal government could reduce Medicare spending by $97 billion by 2013.

Our second- and third-place finishers will also be familiar. Fertilizer makers, such as Mosaic (NYSE: MOS  ) and Potash Corp. of Saskatchewan (NYSE: POT  ) , are up 15.8% over the last month. Warren Resources and its peers in coal-bed methane mining are up 14.5% since late May.

According to you, our Foolish readers, the best stocks in these industries to own now -- i.e., those with four or five of the maximum five stars in CAPS -- are:

Company

CAPS Stars

No. of CAPS Ratings

Percent Bulls

30-Day Price Change

Gastar Exploration (AMEX: GST  )

*****

140

98.5%

33.5%

ShengdaTech (Nasdaq: SDTH  )

*****

955

98.5%

30.5%

Sociedad Quimica y Minera

*****

938

97.2%

36.9%

Quality Systems (Nasdaq: QSII  )

*****

2,046

97.5%

(13.1%)

Sources: Motley Fool CAPS, Yahoo! Finance (current as of 6/28).

And your favorite short candidates -- i.e., those rated with one or two stars in CAPS -- are:

Company

CAPS Stars

No. of CAPS Ratings

Percent

Bears

30-Day Price Change

Pinnacle Gas Resources

**

58

17.2%

33.9%

Sources: Motley Fool CAPS, Yahoo! Finance (current as of 6/28)

This week, I want to talk about one of the most successful picks ever made in a Motley Fool newsletter: Quality Systems. (Twice a five-bagger for Fool co-founder Tom Gardner in Motley Fool Stock Advisor.)

Shareholders took a beating last week. On Tuesday, company president and CEO Lou Silverman said he'd resign as of Aug. 16. No explanation was provided in the company's press release.

Even so, the Stock Advisor team still calls Quality Systems a buy. So do I. Silverman employs a number of talented managers that, for years, have delivered excellent returns on equity and invested capital:

Metrics

FY 2008

FY 2007

FY 2006

FY 2005

ROE

39.1%

40.6%

34.5%

26%

ROIC

36.2%

38.9%

33.1%

24.9%

Source: Capital IQ, a division of Standard & Poor's. Fiscal year ends March 31.

We don't know if they'll continue to be this good without Silverman to guide them. Yet opportunity abounds, as CAPS All-Star ejnelso explained recently:  

Good company providing a service that still has a lot of room to grow. The report, published online on Wednesday in The New England Journal of Medicine, found that doctors who use electronic health records say overwhelmingly that such records have helped improve the quality and timeliness of care. Yet fewer than one in five of the nation's doctors has started using such records. (From the New York Times.)

Call it the simple math of a multibagger in the making.

But that's my take. I'm more interested in what you think. Would you buy Quality Systems at today's prices? Let us know what you think by signing up for CAPS today. It's 100% free to participate.

Cap off your day with related CAPS Foolishness:

Quality Systems is a Stock Advisor selection. SXC Health Solutions is a Motley Fool Hidden Gems Pay Dirt selection. Try either market-beating service risk-free for 30 days.

Fool.com contributor Tim Beyers, who is ranked 20,444 out of more than 110,000 participants in CAPS, is also a member of the Rule Breakers team. You can find Tim's portfolio here and his latest blog commentary here. The Motley Fool's disclosure policy is hotter than city asphalt in the summer heat.


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