The clock's ticking down, your team's down one, you're being double-teamed, and you wouldn't have enough time to get off a good shot even if you were allowed to drop-kick both defenders. So who do you dish the rock to?
Your first thought might be the resident superstar -- the Kobe Bryant or LeBron James. But what if Kobe, as good as Kobe is, is playing colder than an Alaskan snowdrift? That's right, you dish to the guy with the hot hand, the guy who will be deemed en fuego tomorrow on ESPN.
Momentum investors are looking for stocks in a similar state of sizzle when they make investments. They want to give the nod to the stocks that are hot to the touch.
But momentum by itself will only get you so far. To me, simply looking for stocks with momentum is less intriguing than finding high-quality stocks with some positive inertia on their side. It's like kicking the ball out to Michael Jordan or Larry Bird when they do have a hot hand.
To find these top-tier winners, I cross-referenced a simple momentum screen with data from The Motley Fool's new investing community, CAPS. The result is a starting lineup of all-star stocks that all currently have a fiery shooting hand. Each of the companies below is up 30% or more over the past year, is 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 (out of 5) |
|---|---|---|---|
|
Diamond Offshore Drilling |
63.0% |
1.5% |
***** |
|
Intuitive Surgical |
77.5% |
3.1% |
**** |
|
Boeing |
33.5% |
0.5% |
**** |
|
Southern Copper |
151.7% |
0.9% |
***** |
|
Seaspan |
69.2% |
3.3% |
**** |
At first glance, this sure looks like a high 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.
Surgery may not be intuitive, but Intuitive Surgical is
Back in April 2005, David Gardner selected hotshot Intuitive Surgical to play on the Rule Breakers team. Since then, David has re-recommended the stock twice, and it's returned 360% -- a whopping 331% more than the S&P over the same time frame.
Why have investors flocked to Intuitive over the past couple years? Well ... it's pretty intuitive. (Rimshot.) The company created the da Vinci surgery system, a robotic apparatus that gives surgeons a similar feel to doing full open surgery while working through minimally invasive incisions.
The first da Vinci surgery was completed on a prototype in 1997, and by the end of 2006, the company had sold 571 systems. Reportedly, the systems have aided more than 100,000 surgeries all over the world. For the 2006 fiscal year, the company's success translated to $373 million of revenue and a profit margin of nearly 20%. Revenue growth has topped 50% for each of the past three years.
What's really got the company jumping lately, though, is its second-quarter earnings report. For the quarter ended in June, the company announced revenue up 61% versus the prior year, and earnings per share that beat Wall Street's estimates by a fat 20%.
InvestorDeb is one of the 1,143 Intuitive Surgical bulls on CAPS. She has been an Intuitive shareholder since way back, when the stock was at $48. Like many other investors, she thought the second-quarter report was -- as Victoria Beckham might put it -- major. She shares:
The [Intuitive Surgical second-quarter] conference call was obviously great fun if you are long the stock. They are selling these systems all over the world. Hospitals that have the basic da Vinci system, are able to upgrade to higher definition imaging and extra robotic arms. The patented technology allows for a wide and deep moat around the brand, which means that it is extremely difficult to compete directly with the core business.
The only downside she highlights is that there may not be the pullback she's looking for to buy more shares.
That's the team for this week, but the game doesn't stop here. You can check out more of what your fellow Fools have to say about these stocks by stopping by CAPS, and while you're there, you can also take a peek at few more of the other 4,700 rated stocks.
I think I heard a "booyah" somewhere out there -- thanks, Stuart Scott!
More CAPS Foolishness:
When it comes to basketball, Fool contributor Matt Koppenheffer might be the guy Ron Shelton was thinking of when he came up with the title White Men Can't Jump. He does not own shares of any of the companies mentioned. The Fool's disclosure policy has a 55'' vertical jump and can dunk from half court. Or so I hear.
