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.
There's no doubt that now's a tough time to try and find winners out there. To suss out the current league leaders, I ran a simple momentum screen on The Motley Fool's CAPS screener. The performance of each of the stocks below managed to surpass the S&P 500's 8% gain over the past month, and each has been rated highly by CAPS players.
|
Stock
|
Four Week Change
|
12 Month Change
|
CAPS Rating (out of 5)
|
|
Dow Chemical (NYSE: DOW)
|
49.0%
|
(59.8%)
|
****
|
|
Alcoa (NYSE: AA)
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26.8%
|
(71.9%)
|
****
|
|
Yingli Green Energy (NYSE: YGE)
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25.8%
|
(59.0%)
|
****
|
|
Vale (NYSE: VALE)
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21.8%
|
(53.7%)
|
*****
|
|
America Movil (NYSE: AMX)
|
15.2%
|
(38.6%)
|
*****
|
Sources: Yahoo! Finance, Capital IQ, and CAPS as of May 4.
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 toward any of these stocks. In fact, I'll even kick off your research with a look at America Movil.
Providing the pep
There's one thing that we can wipe off the list of potential boosters for America Movil's stock -- swine flu. As a Mexico-based company, America Movil was right in the heart of the outbreak. But flu or no flu, the company's stock has been flying -- what gives?
Earnings, anyone? That's right -- America Movil's first-quarter earnings report provided a lot of the pop. While the global economy continues to swoon -- even if it's swooning somewhat less than before -- the Mexican cellular giant produced some eye-catching results. Denominated in pesos, first-quarter revenue was up 15% from the prior year, as EBITDA and earnings per share rose 13% and 25%, respectively.
Did I just see top shareholder Carlos Slim Helu thumb his nose at Mr. Market?
Looking ahead
Calling America Movil a Mexican cellular giant isn't giving the company nearly enough credit, since it's a force to be reckoned with throughout Latin America. The largest chunk of its 186.6 million subscribers is in Mexico, but its customer count also includes 40 million Brazilians, 27 million Columbians, and 17 million subscribers from Argentina, Paraguay, and Uruguay. Heck, the company even has nearly 12 million customers in the U.S.
Mexico had been taking its lumps even before the flu scare, but Latin America in general is one of the favored regions of the world when it comes to growth potential. And while there are a lot of things that come with strong economic growth, one trend in particular that seems to play out all over the world is a growing base of cellular subscribers. And that is true whether you're America Movil in Latin America, Turkcell (NYSE: TKC) in Turkey, or China Mobile (NYSE: CHL) in China.
TMFPlatoish, one of CAPS' top-performing members, joined the America Movil fan club way back in October 2006, saying:
They should become a dominant long term telecomm player south of the border and turn into a cash generation machine, that will likely be returned to long term patient shareholders in the form of ever increasing dividends. This is a long term play on the development of Latin/South American economies and I believe it will outperform the market for years to come.
Since then, TMFPlatoish has seen his pick beat the market by more than 40 points, as the company continued to notch impressive results. And for those still sitting on the sidelines, though the recession is making the going a bit tougher for America Movil right now, shares are changing hands for a P/E of just less than 13 -- far less than the 20 ratio that prevailed a few years back.
Fielding your team
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 had to say about any of the stocks above by stopping by CAPS. And while you're there you can take a peek at a few more of the 5,300-plus other stocks that are rated on CAPS.
I think I heard a booyah somewhere out there -- thanks, Stuart Scott!
More CAPS Foolishness:
“The Next Great Investment”… That’s how a top global investor describes India’s potential. On Nov. 28, The Motley Fool’s Tim Hanson returns to India to prove it. Follow along in real time and get his TOP pick first (Hanson returned from China in July with a stock that’s up 169%!). Enter email below.
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