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 our Motley Fool CAPS investing community. Each of the companies below has risen 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 (5 max)
|
|
Axsys Technologies (Nasdaq: AXYS)
|
144.0%
|
0.0%
|
*****
|
|
Flowserve
|
86.2%
|
0.0%
|
*****
|
|
Almost Family
|
65.9%
|
3.4%
|
*****
|
|
Otter Tail (Nasdaq: OTTR)
|
45.1%
|
0.0%
|
*****
|
|
Flowers Foods (NYSE: FLO)
|
34.9%
|
3.7%
|
*****
|
Sources: Yahoo! Finance; Capital IQ, a division of Standard & Poor's; and CAPS as of July 21.
At first glance, this sure looks like a high-quality group. But as always, I highly advise Fools to take a closer look before throwing a bounce pass in their direction.
Defending your portfolio
Financials have been on most investors' do not call lists for a while now. Consumer stocks haven't been much more popular lately. The tech sector showed its vulnerability when Google (Nasdaq: GOOG) and Microsoft (Nasdaq: MSFT) both reported disappointing earnings. And while oil-and-gas and agriculture stocks had been a good place to hide out, even some of the best performers over the past year, like Petrobras and Monsanto (NYSE: MON), have receded sharply from their highs.
So what's left for investors at this point? Good old Uncle Sam. Though the distinct sound of pocketbooks slamming shut can be heard all around the United States, the military continues to spend, especially when it comes to high-tech gear. FLIR Systems may be the most familiar name in military optical systems, but investors in with Motley Fool Stock Advisor pick Axsys have also enjoyed significant rewards.
Like FLIR, Axsys produces thermal imaging equipment -- think the Predator's heat-sensitive vision in that great Schwarzenegger flick -- but it also makes more general precision optical equipment for stuff like missile tracking and spaceborne surveillance. It's all very high-performance -- and very G.I. Joe.
The company released earnings back in April, revealing sales and earnings per share that grew 59% and 80%, respectively, year over year. That's a pretty fantastic quarter no matter how you slice it, but against companies like Citigroup (NYSE: C), which announced yet another multibillion-dollar loss, it looks downright outstanding. Axsys releases its most recent quarter's earnings today after the market closes. We'll have to wait and see whether it repeats last quarter's stellar performance.
On CAPS, the stock is a solid five-star pick, with 487 CAPS members bullish on it, versus just 11 bears. One of those many fans, CAPS All-Star DABRASCO, picked Axsys to outperform back in mid-May: "During these times of Post-911, majority of your defense companies are safe to pick. There will be a continuous need for weapons and high-tech machinery to supply our troops and unless there is a "bid war" between contracts, the profit should be secure."
Fielding your team
Do you think any (or all!) of these companies deserve a place on your All-Star team? Share your thoughts on the matter, or check out more of what your fellow Fools had to say about any of the 5,500-plus stocks our community's rated, when you stop by CAPS.
I think I heard a boo-yah somewhere out there -- thanks, Stuart Scott!
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