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 (you can run the same screen by clicking here). 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)
|
|
McDermott (NYSE: MDR)
|
23.9%
|
(78.4%)
|
*****
|
|
JA Solar Holdings (Nasdaq: JASO)
|
22.0%
|
(84.7%)
|
***
|
|
USEC (NYSE: USU)
|
16.4%
|
(33.2%)
|
*****
|
|
Corning (NYSE: GLW)
|
14.1%
|
(57.3%)
|
*****
|
|
Manulife Financial (NYSE: MFC)
|
12.9%
|
(50.1%)
|
*****
|
Sources: Yahoo! Finance, Capital IQ, a division of Standard & Poor's, and CAPS as of Jan. 13.
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 JA Solar.
Providing the pep
The decline in oil has been a kick in the stomach for solar, hasn't it? Well, yes and no. As some Foolish readers might be quick to point out, there isn't a terribly close tie between oil and solar in terms of where they are used. Most crude oil ends up in the form of fuel that gives pep to cars and airplanes, and as far as I've heard, nobody's (seriously) working on a solar car yet. But oil is often seen as a bellwether for the broader energy industry and, sure enough, natural gas and coal -- more direct competitors to solar power -- have been crashing as well, raising concerns that low-priced fossil fuels will discourage investment in alternatives.
We haven't yet seen a quick turnaround in energy prices lead to renewed interest in renewables. But it appears investors have been rummaging through the rubble of the industry to see if there are some bargains to be had. It probably shouldn't be surprising that investors have gravitated toward JA Solar -- it reported strong operating profit in its most recent quarter, it has a relatively strong balance sheet, and when the market bottomed back in November the stock was trading at less than three times analysts' profit expectations for 2008.
Looking ahead
Resurgent or not, though, I'm not so sure that I'm with the 1,081 CAPS members who have rated JA Solar an outperformer. Don't get me wrong, in the longer term I'm as bullish on solar making up a larger piece of the energy pie as I am bearish on New Kids on the Block ever making a successful comeback. However, in the near term I think there are an awful lot of very young solar companies -- whether we're talking about 3-year-old JA Solar, 2-year-old LDK Solar (NYSE: LDK), or 4-year-old Solarfun (Nasdaq: SOLF) -- that won't survive as stand-alone entities to see the day that solar carries serious clout.
But hey, you don't have to agree with me -- most CAPS members don't, including CAPS All-Star mrindependent, who gave JA Solar a thumbs-up back in mid-December, writing:
This chinese solar stock is down more than 80 % from its peak. The company looks financially stable and it is a good play on two trends I believe in: (1) the solar industry should thrive under Obama presuming petroleum does not collapse any further and (2) China should rebound stronger than the United States given its higher volatility and better prospects.
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 or check out more of what your fellow Fools had to say by stopping by CAPS. While you're there you can also take a peek at a few more of the 5,400 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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