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.
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.
|
Stock
|
12-Month Change
|
Percent Below 52-Week High
|
CAPS Rating (5 max)
|
|
Whiting Petroleum (NYSE: WLL )
|
117.8%
|
1.5%
|
*****
|
|
Compass Minerals (NYSE: CMP )
|
113.7%
|
3.4%
|
*****
|
|
AK Steel (NYSE: AKS )
|
96.7%
|
4.7%
|
****
|
|
CSX (NYSE: CSX )
|
48.3%
|
3.2%
|
*****
|
|
Sun Hydraulics (Nasdaq: SNHY )
|
43.7%
|
0.9%
|
*****
|
Sources: Yahoo! Finance, CapitalIQ, and CAPS as of June 2.
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.
The triple threat: food, fuel, and metals
When it comes to the stocks with momentum, there's been a pretty consistent theme. Week in and week out it seems that we can expect almost constant new highs from companies involved with metals, energy, and food. We've got our share on this week's list and they're sitting right at the top. Whiting Petroleum is out there searching for and producing oil and gas, while Compass Minerals produces mineral salts and fertilizer and AK Steel -- not surprisingly -- makes steel.
Not only have these commodity stocks done well, but many investors think that this will continue to be a good area for their money. After all, oil prices seem unstoppable, food prices are driving demand for fertilizer, and global demand for steel has been red hot.
Perusing CAPS, it's not difficult to find plenty of bullish commentary on this trio. JOHNROCKET, for instance, shared his positive opinion on Whiting in mid-May and wrote:
Oil and petroleum are an addiction in this and past world economic demands. To think the market will drop consistently in the near future is folly. When I see a huge leap forward in alternative energy markets will I begin to think otherwise.
Meanwhile, chk999, ranked as the third top player in CAPS, gave a thumbs-up to AK Steel in April, noting: "This is a bet that expansion in the emerging economies doesn't wind down too soon. In the meantime, they need steel and lots of it!"
And, not to leave Compass out in the cold, AnomaLee -- another CAPS All-Star -- got positive on the stock in early May and remarked that the fertilizer bloc "is growing as fast as a 4-year old taking their Flintstones everyday." AnomaLee also likes Intrepid Potash (NYSE: IPI ) when it comes to plant food.
Not all the talk out there is positive, though, and there are some investors who think these areas have run too far, too fast and the stocks are now overheated. Some are even going as far as to utter the "b"-word. This certainly seems like a possibility, but for now the bears are getting trampled by bulls that see nothing but blue skies ahead.
So do you think any (or all!) of these companies deserve a place on your All-Star team? You can share your thoughts on them or check out more of what your fellow Fools have to say by stopping by CAPS. While you're there, take a peek at a few more of the 5,600-plus other stocks that are rated on CAPS.
I think I heard a booyah somewhere out there -- thanks Stuart Scott!
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