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 the superstar -- but what if that player's ice cold at the moment? So instead, you pass to the player 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. It's like kicking the ball out to your team's stars when they do have a hot hand.
To find these league-leading winners, I cross-referenced a simple momentum screen with data from The Motley Fool's CAPS investing community. Each of the companies below is up 25% 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)
|
|
Express Scripts (:ESRX)
|
125.3%
|
0.5%
|
****
|
|
Barrick Gold (:ABX)
|
60.1%
|
4.2%
|
****
|
|
PPL
Corp. (NYSE:PPL)
|
48.9%
|
3.0%
|
*****
|
|
Exelon (NYSE:EXC)
|
38.8%
|
3.5%
|
****
|
|
Chevron (NYSE:CVX)
|
30.6%
|
3.5%
|
*****
|
Sources: Yahoo! Finance, CapitalIQ, and CAPS as of Jan. 7.
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.
Catching the gold bug
OK, here's a quick recap of 2007: housing down, credit frozen, oil up, dollar down, global stocks up, U.S. stocks up and down, metals up. Got that?
Last year was a rocky one, marked by a lot of fear and uncertainty, particularly in the U.S. The Fed spent the back half of the year scrambling to cut rates and make sure that the entire banking system didn't seize up. Meanwhile, growth around the world, particularly in the BRIC countries, chugged right along, pushing up the price for commodities. Throw all those things in a big pot with a little Emeril's Essence and what do you have? Gold at record levels.
From there, it's not much of a leap to guess that the stocks of top gold producers like Barrick, Kinross (NYSE: KGC ) , and Goldcorp (NYSE: GG ) have been doing quite well. Turning to CAPS, there's no shortage of bullish sentiment for Barrick, where the stock has the support of almost 800 CAPS players.
Theskyiscrape has been bullish on Barrick, and gold more broadly since the early summer of 2007. He gave a great outline of the bull case for the company last June. Here's an excerpt:
Gold stocks have been out of favor and disconnected from the spot price of gold ... Barrick was in particularly worse shape relative to its peers, owing to its large proportion of hedging contracts. Barrick has recently bought its way out of all existing hedging on current producing mines ...
Earnings are expected to rise sharply for Barrick, as it is now able to sell production gold at spot price. The demand/supply story for gold is also better than what may be believed by most ... Barrick commands [about] 10% of the worlds' annual production, has the worlds' largest reserves at [about] 123M ounces, and has just shy of $3B in cash to fund further exploration and acquisitions.
So does Barrick 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 you can also take a peek at few more of the 5,300 other stocks that are rated there.
I think I heard a boo-yah somewhere out there -- thanks, Stuart Scott!
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