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 star -- but what if he or she's ice-cold at the moment? Instead, you pass to the one 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 star when they do have a hot hand.
Now's a tough time to try to find winners out there, but I ran a simple momentum screen on The Motley Fool's CAPS screener. Each of the companies below was up more than double the S&P 500's 6% gain over the past month and has been rated highly by CAPS players.
|
Stock
|
Four-Week Change
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12-Month Change
|
CAPS Rating (Max 5)
|
|
Freeport-McMoRan (NYSE: FCX)
|
59.2%
|
(74.1%)
|
*****
|
|
PotashCorp (NYSE: POT)
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44.9%
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(47.0%)
|
****
|
|
Halliburton (NYSE: HAL)
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37.9%
|
(49.7%)
|
****
|
|
Marvell (Nasdaq: MRVL)
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23.4%
|
(46.7%)
|
****
|
|
Merck (NYSE: MRK)
|
17.0%
|
(46.0%)
|
****
|
Sources: Yahoo! Finance, Capital IQ, and CAPS as of close on Jan. 2.
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. In fact, I'll even kick off your research with a look at Freeport-McMoRan.
Providing the pep
It wasn't all that long ago that I was talking about why Freeport's stock was taking a hit (if you missed it, it was because of lower metals prices and production cuts). It seems those concerns have quickly waned and investors have flocked back to the stock.
The reason is simple: the government. Just when it seemed investors had reached the peak of their pessimism on metals and other natural resource stocks, President-elect Barack Obama started talking about a massive stimulus package in the hundreds of billions that would be aimed at U.S. infrastructure. And voila! just like that, mining and metals stocks from Freeport to Rio Tinto (NYSE: RTP) and Steel Dynamics (Nasdaq: STLD) were must-haves again. Throw in other global infrastructure plans, such as China's $586 billion spending binge, and mining and metal companies are back on fire.
Looking ahead
Freeport has long been a CAPS favorite and -- except for a short blip in the fall -- it has maintained its five-star rating through the stock's hard fall. Though it could take some more lumps in the near term as we continue down the recessionary rabbit hole, many CAPS members see the company as a bit of a hedge because of its exposure to gold. However, most of the Freeport bulls on CAPS are firmly focused on the future, which they expect will bring back global infrastructure growth and greater demand for copper.
CAPS All-Star trexmoney is one of the 5,064 fans of Freeport on CAPS, writing recently:
Materials will make a major move in the second half of 09. Global growth will return and then the demand for these materials will also return. The capacity cuts allready in place will help to support higher prices in 09.
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 Freeport- McMoran or check out 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 5,400 other stocks that are rated.
I think I heard a booyah somewhere out there -- thanks, Stuart Scott!
More CAPS Foolishness:
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