5 All-Star Stocks on Fire

The clock's ticking down, your team's down one, you're being double-teamed, and you wouldn't have enough time to get off a good shot even if you were allowed to drop-kick both defenders. So who do you dish the rock to?

Your first thought might be the resident superstar -- the Kobe Bryant or LeBron James. But what if Kobe, as good as Kobe is, is playing colder than an Alaskan snowdrift? That's right, you dish to the guy with the hot hand, the guy who will be deemed en fuego tomorrow on ESPN.

Momentum investors are looking for stocks in a similar state of sizzle when they make investments. They want to give the nod to the stocks that are hot to the touch.

But momentum by itself will only get you so far. What sounds more interesting to me than simply looking for stocks that have momentum is finding high-quality stocks that also have some positive inertia on their side. It's like kicking the ball out to Michael Jordan or Larry Bird when they do have a hot hand.

To find these high-quality winners, I cross-referenced a pretty simple momentum screen with data from The Motley Fool's new investing community, CAPS. The result is a starting line-up of all-star stocks that all currently have a fiery shooting hand. Each of the companies below is up 25% or more over the past year, is within 5% of its 52-week high, and has been rated highly by CAPS players.

Stock

12-Month Change

% Below 52-Week High

CAPS Rating

Cypress Semiconductor (NYSE: CY  )

105%

0.8%

****

William Wrigley Jr.

44%

2.2%

****

McDonalds (NYSE: MCD  )

35%

2.6%

****

Exxon Mobil (NYSE: XOM  )

31%

4.6%

****

Coca-Cola (NYSE: KO  )

27%

0.8%

****

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

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.

Cypress' buried treasure
With the major indices spending last week wilting under the weight of less-than-inspiring results from the likes of Bank of America (NYSE: BAC  ) and Citigroup (NYSE: C  ) , some of the names pushing 52-week highs aren't all that surprising. Stability and reliability is the name of the game when it comes to stalwarts like Income Investor selection Wrigley, Inside Value favorite Coca-Cola, and Exxon.

So it might seem strange with a broad market sell-off that Cypress Semiconductor is rubbing elbows with these sturdy stocks. CAPS player kongslee took a stab at explaining it in a recent outperform call on Cypress. He said that solar power is here to stay and that Cypress "[owns] more or less 50% of SunPower (Nasdaq: SPWR  ) ."

Now things start to get a bit more interesting. SunPower, one of the larger U.S.-based solar players, has been on a tear over the past year and is up over 200%. If we take the 44.5 million shares of SunPower that Cypress owned as of July 1, we come up with a value of roughly $4.5 billion. Subtract that from Cypress' $5.2 billion market cap and you'd only be paying $700 million for Cypress' business -- which also had $186 million in net cash and short-term investments at the end of the second quarter.

The million dollar question here, then, is whether Cypress' operations are worth more than $514 million. On CAPS, 264 Fools seem to think that it is, versus a mere 19 that think the stock will fall short of the market.

So does Cypress deserve a place on your All-Star team? You can share your thoughts on it or check out more of what your fellow Fools had to say about it (or any of the other stocks above) by stopping by CAPS. And while you're there, you can also take a peek at few more of the 5,000 other stocks that are rated on CAPS.

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

More CAPS Foolishness:


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