The clock's ticking down, your team's down one, and you're being double-teamed. You wouldn't have enough time to get a good shot off 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 Tracy McGrady. 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.
What sounds more interesting to me than simply looking for stocks that have momentum, though, is finding high-quality stocks that also have some positive inertia on their side. Imagine being able to kick the ball out to Michael Jordan or Larry Bird when they do have a hot hand.
To accomplish this, I cross-referenced a pretty simple momentum screen with data from The Motley Fool's new investing community, CAPS. The result is a few All-Star stocks that all currently have a fiery shooting hand. Each of the companies below is up 30% 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 |
Percent Below 52-Week High |
CAPS Rating (out of 5) |
|---|---|---|---|
|
CNOOC (NYSE:CEO) |
53.5% |
2.1% |
***** |
|
Apache (NYSE:APA) |
37.3% |
1.0% |
***** |
|
American Software (NASDAQ:AMSWA) |
43.0% |
0.6% |
***** |
At first glance, this sure looks like a high-quality trio. But, as always, I highly advise taking a close look before you throw a bounce pass in the direction of any of these stocks.
Locking down offshore China
These days, just the mention of "oil and gas" can be music to many investors' ears. Exxon Mobil (NYSE:XOM) is up 45% over the past 12 months, and smaller services firms like Noble Corp. (NYSE:NE) are up a similar amount. Throw into the equation that CNOOC is the dominant offshore producer of oil and gas in China, and you've got a very good-looking stock.
CAPS All-Star metoo105 called CNOOC an outperformer, reasoning:
The nice thing about this [company] is that you know that a certain amount of money that flows through an economy will need to flow through their energy sector. When there aren't many competitors, you pretty much know where the money's going. The problems here are with regulation. But still, a nice risk-reward.
Exploring Apache
Apache is a $27 billion oil and gas exploration and development company. The company has interests in the U.S. in places like the Gulf of Mexico, the Gulf Coast, East Texas, and the Anadarko basin, as well as outside the U.S. in Canada, Egypt, Australia, the U.K., and Argentina. Despite its run over the past year, the stock still only trades at around 11 times expected 2007 earnings.
Chouhung, a CAPS All-Star who's bullish on Apache, shares:
Of all my CAPS picks, this is the one I own. And I rest easy at night. [The management] team knows how to grow what it has. Kudos for the gas processing plants and making good use of [Forties field] downtime. [Apache has] lots of acreage with potential.
The goodies inside American Software
American Software is an interesting little software and consulting company focused on enterprise and supply-chain management. Thought it's a small company at just less than $250 million, it's been around since 1970. It operates in three business segments: supply-chain management, enterprise resource planning, and IT consulting.
The stock has an impeccable record in CAPS, where it has 98 outperform picks against zero underperforms. One American Software bull, dietvanillacoke, likes the collective assets that investors get with American Software:
[American Software] owns 88% of Logility (NASDAQ:LGTY), which is about 11.3 [million] shares. Unless my math or understanding are wrong, that means each share of [American Software] "owns" about .45 shares of [Logility]. If [Logility] is trading at $9.50, that makes each share of [American Software] contain about $4.275 of LGTY plus $2.818 of cash. At $9.00 per share, that means you are getting the whole rest of [American Software] at $9.000 - $4.275 - $2.818 = $1.907. Doesn't sound like a bad deal to me!
And that's the team for this week. You can check out more of what your fellow Fools had to say about these stocks by stopping by CAPS, and while you're there, you can take a peek at a few more of the 4,600 other rated stocks.
I think I heard a "booyah" somewhere out there - thanks, Stuart Scott!
More CAPS Foolishness:
When it comes to basketball, Fool contributor Matt Koppenheffer might be the guy Ron Shelton was thinking of when he came up with the title White Men Can't Jump. He does not own shares of any of the companies mentioned. The Fool's disclosure policy has a 55'' vertical jump and can dunk from half court. Or so I hear.
