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.
There's no doubt that now's a tough time to try and find winners out there, but to find the current league leaders, I ran a simple momentum screen on The Motley Fool's CAPS screener. Each of the companies below was up a double-digit percentage over the past four weeks -- despite the S&P's loss -- and has been rated highly by CAPS players.
|
Stock
|
Four-Week Change
|
12-Month Change
|
CAPS Rating (5 max)
|
|
Yamana Gold (NYSE: AUY )
|
59.1%
|
(47.3%)
|
*****
|
|
ABB (NYSE: ABB )
|
25.5%
|
(50.1%)
|
*****
|
|
Hewlett-Packard (NYSE: HPQ )
|
19.0%
|
(32.7%)
|
****
|
|
Walgreen (NYSE: WAG )
|
13.8%
|
(28.6%)
|
*****
|
|
NYSE Euronext (NYSE: NYX )
|
16.1%
|
(68.3%)
|
*****
|
Sources: Yahoo! Finance, Capital IQ, a division of Standard & Poors, and CAPS as of Dec. 15.
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. In fact, I'll even kick off your research with a look at Yamana Gold.
Providing the pep
It shouldn't be surprising that many investors are concerned about the potential for inflation to hit the U.S., as the government's concerted recession-fighting efforts raise fears of soaring money supplies and possible inflation. Yet, gold prices have taken a huge hit since early this year. Traditionally, gold has been seen as, shall we say, the gold standard in inflation protection -- but it seems that deflation fears have pushed gold prices in the wrong direction for mining companies lately.
Yamana, along with competitors like Barrick Gold (NYSE: ABX ) and Kinross Gold (NYSE: KGC ) had plunged from highs early in the year to lows in late October, with Yamana taking the biggest hit -- over 80% from peak to trough. It now appears that -- at least for the moment -- investors are rethinking their drastic revaluation of gold and gold producers. Kinross has more than doubled off its low, while both Yamana and Barrick have been nearly two-baggers as well. It has certainly been a move for gold investors to be thankful for.
Looking ahead
We're in uncharted territory when it comes to the current global financial situation, so trying to prognosticate on much of anything is going to be an uphill battle. Many investors, though, think that gold prices rising is a matter of "when," not "if." On CAPS, this has translated to a landslide of bullish ratings for gold producers. Of the 3,353 CAPS members who have weighed in on Yamana, 3,258 have put their thumbs up on the stock.
CAPS All-Star TheHuney logged his thoughts on Yamana earlier this month:
You can find a gazillion commentaries on the Interwebz about why gold prices are going to rise. Given the way the US and other world governments are throwing around money to "combat" the credit crisis, I think rising gold and silver prices are all but inevitable. The only question for me is "when"? Has it already started? Does it have a few more months? I can't say for sure, but I'm going thumbs up on most silver and gold stocks right now.
More recently, rockiedog07 shared a similar sentiment:
These are some tough times... Some said that gold was a bubble in spring 08. Currently, I wonder if the dollar is a bubble? If the dollar is a bubble and drops, what will that do to gold? I'm willing to bet that gold will go up. Time... patience... and the market correcting itself will send gold up... Let's see what happens...
Fielding your team
So, do you think any (or all!) of these companies 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 a few more of the almost 5,400 stocks that are rated on CAPS.
I think I heard a booyah somewhere out there -- thanks Stuart Scott!
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