Hot Stocks You're Buying Now

Welcome back to another Foolish review of the hottest stocks as ranked by Motley Fool CAPS. We're looking at the three best-performing industries over the past 30 days and your favorite long and short candidates in each.

Click! Investors have turned the channel from cable TV systems to travel services. Their 44.6% average return -- provided by the likes of Expedia and Priceline.com (Nasdaq: PCLN  ) , among others -- is a dream destination for portfolios everywhere.

Meanwhile, residential construction companies and their 22.5% return over the past 30 days move up to second place. Our third-place group, homebuilders, did nearly as well, up 19.9% since early March.

According to you, our Foolish readers, the best stocks in these industries to own now -- i.e., those with four or five of the maximum five stars in CAPS -- are:

Company

CAPS Stars

No. of CAPS Ratings

Percent Bulls

30-Day Price Change

Ctrip.com (Nasdaq: CTRP  )

*****

3,849

96.5%

1.1%

Homex Development (NYSE: HXM  )

*****

246

95.9%

3.5%

Sources: Motley Fool CAPS, Yahoo! Finance (current as of April 4).

And your favorite short candidates -- i.e., those rated with one or two stars in CAPS -- are:

Company

CAPS Stars

No. of CAPS Ratings

Percent Bears

30-Day Price Change

Orleans Homebuilders (AMEX: OHB  )

*

242

80.1%

30.8%

M/I Homes (NYSE: MHO  )

*

352

77.5%

13.8%

WCI Communities (NYSE: WCI  )

*

586

77.6%

15.7%

Sources: Motley Fool CAPS, Yahoo! Finance (current as of April 4).

Not surprisingly, both of today's five-star candidates hail from somewhere other than the United States. Foreign stocks are often the fastest growers and, in many cases, appear poised to outperform their U.S. peers. That's been true for Ctrip.com, a Chinese travel company and a multibagger winner for Motley Fool Hidden Gems.

Mexican homebuilder Homex has yet to earn huge returns, as Ctrip.com has. But that's exactly why I like it. Cheap stocks can make for hot returns, and there are plenty of cheap stocks south of the border. Cemex (NYSE: CX  ) , for example.

Homex isn't as cheap as Cemex on an absolute basis. But its 0.91 PEG ratio -- based on projected 2008 earnings -- is, at worst, reasonable. I also like the thesis that CAPS All-Star slbutton offered in November:

Homex has two things going for it. One is demographics. Goldman Sachs' in-house eggheads project that Mexico will be the world's fifth-largest economy by 2040. The second is that, in early November of 2007, concerns over the sub-prime mortgage meltdown in the U.S. (and the worse Alt-A meltdown quite possibly to come) have led investors to flee homebuilders en masse. I'm "short" (in CAPS) quite a few homebuilders myself, but I think Homex is a different story: earnings of 2.80/share, growth forecasts of 22% for the next five years, [return on equity] > 20%, debt higher than I like to see, but under control (0.443 debt/equity), strong insider ownership. Even earnings growth of only 12%, and no growth in book value, yields a 2012 "fair" price, which represents an annualized return of about 15% (NB: these calculations are based on [earnings per share] and book value, not [free cash flow] and cash on hand).

Color me impressed. I've added Homex to my CAPS watch list.

But that's me. What would you do? Would you buy Homex at today's prices? Let us know what you think by signing up for CAPS today. It's 100% free to participate.

Cap off your day with related CAPS Foolishness:


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