5 All-Star Stocks on Fire

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 getting the ball out to your team's superstars 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 30% or more over the past year, now trades within 5% of its 52-week high, and has been rated highly by CAPS players.


12-Month Change

Percent Below 52-Week High

CAPS Rating (Out of 5)

Western Digital (NYSE: WDC  )




Activision (Nasdaq: ATVI  )




Cimarex Energy (NYSE: XEC  )




DRS Technologies (NYSE: DRS  )




Vaalco Energy (NYSE: EGY  )




Sources: Yahoo! Finance, Capital IQ (a division of Standard & Poor's), and CAPS.

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.

I am Western Digital -- hear me roar!
Traditional magnetic hard disk drives are clearly the old guard. Though they still dominate the storage industry and can be found in nearly every computer out there, all the excitement these days is focused on the faster, newer solid-state flash memory from companies like STEC and SMART Modular Technologies (Nasdaq: SMOD  ) .

But don't tell that to Western Digital. Since last year, the stock has more than doubled as many investors decided that the company's low earnings multiple and healthy cash flow more than compensated for the threat from newer technology. On CAPS, All-Star stock picker SuperOgi weighed in early this year, calling Western Digital "a well run American company with a diversified global customer base" and noting:

Flash storage is a long term concern, but once flash storage becomes affordable ... [Western Digital] can use quarterly cash flow ... and just buy a flash media manufacturer (Spansion, for example, has market cap of 385.72M). With Western Digital's controller and logic components added, it would probably make a better drive than SanDisk (Nasdaq: SNDK  ) could ever make.

Even with the stock's run-up, it still is trading at less than nine times analysts' FY2008 and FY2009 earnings expectations. (FY2008 ends June 27 of this year.) Plus, Western Digital has been beating analysts' expectations since the first quarter of 2005, and some on Wall Street think this will continue, because the company is still giving conservative guidance. So while investors should definitely be on the lookout for the threat from flash on the horizon, Western Digital and its dominant position in current disk-drive technology may be able to continue this torrid run.

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 have to say about any of them, by stopping by CAPS. And while you're there, you can also take a peek at few more of the 5,600-plus other rated stocks.

I think I heard a “booyah” somewhere out there – thanks, Stuart Scott!

More CAPS Foolishness:

Activision is a Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days.

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-inch vertical jump and can dunk from half court. Or so I hear.

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Related Tickers

10/21/2016 4:00 PM
WDC $53.07 Down -0.79 -1.47%
Western Digital CAPS Rating: ***
DRS $80.35 Down +0.00 +0.00%
DRS Technologies CAPS Rating: ****
EGY $0.85 Down -0.03 -3.23%
VAALCO Energy CAPS Rating: **
SMOD.DL $0.00 Down +0.00 +0.00%
SMART Modular Tech… CAPS Rating: ***
SNDK.DL $0.00 Down +0.00 +0.00%
SanDisk CAPS Rating: ***
XEC $137.15 Down -1.47 -1.06%
Cimarex Energy CAPS Rating: **