5 All-Star Stocks on Fire

The clock's ticking, your team's down by 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. 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. Instead of looking for stocks that have momentum, I'd rather find high-quality stocks that also have 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 high-quality winners, I cross-referenced a simple momentum screen with data from The Motley Fool's new investing community, CAPS. The result? A starting lineup of all-star stocks, each currently sporting a fiery shooting hand. Each of the companies below is up 30% or more over the past year, now sits within 5% of its 52-week high, and has been rated highly by CAPS players.

Stock

12-Month Change

Percentage Below
52-Week High

CAPS Rating

China Life Insurance (NYSE: LFC  )

207.2%

3.3%

****

Companhia Vale do Rio Doce (NYSE: RIO  )

188.8%

2.8%

*****

Monsanto (NYSE: MON  )

103.2%

3.1%

****

America Movil (NYSE: AMX  )

56.70%

3.3%

*****

Nike (NYSE: NKE  )

41.2%

1.3%

****

Sources: Yahoo! Finance, Capital IQ, and CAPS as of Oct. 15.

At first glance, this sure looks like a high-quality group. But as always, I highly advise Fools to take a close look before throwing a bounce pass to any of these firms.

China steals the show
What else is new, right? It's rare to see a $68 billion life insurance company rise more than 200% in a single year, but if it can happen anywhere right now, China is the place.

So is it bubble, bubble, toil, and trouble for China and China Life? It's certainly an appealing conclusion, when we consider that China Life is trading at a multiple of 7.5 times its trailing revenue, versus revenue multiples between 1 and 2 for competitors like MetLife (NYSE: MET  ) and Manulife (NYSE: MFC  ) .

CAPS player chrismichael1 certainly agrees with this assessment. He noted earlier this month that he thought China Life's price had outrun the company's realistic prospects. "While irrationality can (and does) prevail in the short term, company fundamentals determine share prices over time," he said. "This stock should be trading about 20% to 25% lower than its current price."

Of course, that's a minority opinion on CAPS. Most players seem to think that the huge Chinese market and growth potential for China Life make it worth the price. One such player, All-Star JohnBugsy, claims that there is "virtually unlimited potential client base [and insurance is] a necessary evil product. [China Life] owns the life insurance market in China."

Does China Life deserve a place on your All-Star team? You can share your thoughts on it, or see what your fellow Fools had to say any of the stocks above, by visiting CAPS. It's your source for our Foolish community's insights on more than 5,000 rated stocks.

I think I heard a boo-yah somewhere out there -- thanks, Stuart Scott!

More CAPS Foolishness:


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