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 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 10% of its 52-week high, and has been rated highly by CAPS players.

Sources: Yahoo! Finance, CapitalIQ, and CAPS as of Sept. 22.

At first glance, this sure looks like a high-quality group. But as always, I highly advise taking a closer look before you throw a bounce pass in the direction of any of these stocks.

So much for BABY steps
Back in July, I highlighted Hidden Gems favorite Natus Medical in this column, noting that Natus' focus on health-care technology for newborns, along with its smart acquisition program, would help the stock stay afloat during tough times for the rest of the market. It most certainly did. Natus was up significantly year-over-year back in July, but it's managed to tack on another 17% since then. In the same period, the S&P 500 shed more than 5%, and big health-care names like Merck (NYSE:MRK) and Bristol-Myers (NYSE:BMY) slid 15% and 5%, respectively.

So what's happened since the last time we looked at this winner? For starters, the company announced some snazzy second-quarter earnings. Revenue and earnings rose 41% and 62%, respectively. Not only did earnings top Wall Street's estimates, but the company also boosted its earnings guidance for 2008. This voracious acquirer also continued its buyout streak, most recently picking up NeuroCom, a specialist in the field of balance and mobility disorders. As with most of its other acquisitions, Natus expects that NeuroCom will be immediately accretive to earnings.

Not surprisingly, the CAPS community has stayed positive on Natus. Of the 1,320 CAPS members who currently have open ratings on the stock, 1,287 think that it will outpace the S&P 500. One recent Natus bull, Option1307, who rated the stock an outperformer earlier in the month, noted that the stock's valuation is high, but said:

A [dominant] company in its niche in the US with about a 90% share of it ... A good prescence in Japan, Australia, and looking to emerge more in EU. Overall a solid company with a muched needed product that won't go away EVEN in a recession. They have been actively buyiny out others these last few years and are hoping to continue. Also, I think a buyout of BABY is actually highly likely in the coming year.

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 on it, or see more of your fellow Fools' insights on it or any of the other stocks above, by stopping by CAPS. While you're there, you can also take a peek at few more of the 5,500-plus other stocks we've rated on CAPS.

I think I heard a boo-yah somewhere out there -- thanks, Stuart Scott!

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