The Hotties and the Notties

As you've no doubt heard, the government seized Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) over the weekend. That kind of makes moot the improvement the two mortgage giants made over the past week. Perhaps there were deeper problems than either had let on, problems that caused the Treasury Department to act as it did. Regardless, with their shares almost worthless, we can safely assume that these two won't be the hot stocks this week.

US Airways (NYSE:LCC) was the one of the top winners among airlines last week, rising 20% as oil prices continued their slide toward $100 a barrel. Yet the turmoil in the economy, which is causing unemployment to climb, may create demand-side problems that should have investors asking why shares are still flying high. That certainly seems to be what CAPS member jester112358 is asking when he notes all the factors that still conspire against the airline: "Airlines are going to have a tough time making money for quite some time. All the factors work against them."

As we said, the two mortgage companies financed the industry's push to the top of the heap, but since airlines have yet to be subsumed by the government, they're the market's next biggest stars. Below are the top five industries, followed by the five worst.

Source: Bigcharts.com

When you're hot, you're hot
I was once castigated for identifying Continental Airlines (NYSE:CAL) as one of the airlines not charging for a traveler's first checked bag, but apparently I was just a little early. In an effort to offset the high cost of oil, Continental is joining a list of carriers like UAL (NASDAQ:UAUA) and AMR (NYSE:AMR) that have instituted first-bag fees. Yet while it has a $25-per- second-bag fee in place like the others, it hasn't yet resorted to charging for snacks and beverages.

CAPS member malteholm thinks Continental has the ability to take market share from its rivals through the use of innovative new programs, though bag fees were undoubtedly not being considered:

Airline business is tough with current oil prices and heavy downturn in the world economy, but this one has shown massive potential with their ever improving concept, always defining new business standards. Great leadership, and now leaving SkyTeam to join StarAlliance which could help this company get more marketshare and customers from the European market.

Yet any uptick in the price of oil sends airline stocks scattering. The approach of Hurricane Ike toward the Gulf of Mexico has the market expecting the worst, and that pushed oil prices back up to around $110 a barrel. That sent airline stocks tumbling, no doubt aided by a false report that UAL was filing for bankruptcy. When your stock can be rattled by any and all suggestions of calamity, it supports the notion that the underlying strength of your business is in question.

When you're not, you're not
While coal was still the big loser, you wouldn't necessarily think distillers and vintners would be next in line. When the economy goes south, don't people drink more? One of the worst performers for the week was Central European Distribution (NASDAQ:CEDC), a cold, gray name that belies the prodigious amount of vodka it produces. Even the prospect of reaffirming its full-year earnings guidance couldn't boost shares back up.

CAPS member dcrednek noted back in July that CEDC had enjoyed a terrific run-up over the past year, suggesting that there's plenty of upside left if it can simply maintain its historic growth rates:

CEDC just got a 1 rating for timeliness from Value Line, and holds a 3 for safety. The company imports, distributes, and produces alcoholic beverages in Poland, Hungary, and Russia. From 1998 to 2007 sales have increase at an annualized rate of 41%; earnings over the same period increased at a rate of 30.8% annualized. Wine and spirit sales in these countries should follow corresponding rises in disposable income... And although share price has increased 75% in the past twelve months I think that this one has plenty of upside if it can just achieve have of its historic revenue and earnings growth rates going forward over the next 3-5 years.

Hot or not?
Industries can run hot or cold, and cyclical ones can enjoy a long time in the sun followed by extended periods behind the clouds. You can start your own research on the stocks that comprise these industries on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. Then let us know ... are they hot or not?