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 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) |
|---|---|---|---|
|
XTO Energy |
59.0% |
1.3% |
***** |
|
Ceradyne |
62.6% |
0.3% |
***** |
|
Mitcham Industries |
39.0% |
0.1% |
***** |
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.
Gassing up returns
CAPS All-Star grmind thinks there is a lot to like about XTO Energy:
XTO has terrific management ... These guys know where to find and how to drill for gas, [as] reflected by double digit increases in both volumes and proved reserves in 2006. Ethanol production uses a great deal of gas, and gas will still be the energy source of choice for new power plants in the U.S. Temporary weaknesses in natural gas prices resulted in 4th quarter results modestly weaker than expected, providing a buying opportunity.
Ditto the part about the weakness in natural gas prices for the first quarter. Despite a 10% increase in the daily production levels for the first quarter versus the prior year, a 19% decline in the price of gas helped revenue slump 4% year over year.
More recently, though, the company announced the acquisition of $2.5 billion worth of natural gas and oil properties from Dominion Resources
Cutting through the BULL at Ceradyne
As fellow Fool Rich Smith wrote recently, Ceradyne is likely moving into the new area of armored vehicles to compete with the likes of General Dynamics
He also notes, however, that there is a lot to like about the company -- and the stock -- besides BULL. On CAPS, 629 players seem to agree with Rich against a measly 16 dissenters. MissDookN points out that Ceradyne meets two key criteria, "great management and a good price." Paxmaker adds:
Not only is productivity up along with overall sales, but the number of applications continue to grow. [Ceradyne] will evolve either into a vibrant large cap or be taken over by a multi industry conglomerate.
MINDing Mitcham
The thesis for growth at Mitcham Industries is simple: As long as energy prices remain high, there is going to be strong demand for the seismic equipment the company leases. Mitcham has relationships with and buys equipment from the major seismic equipment manufacturers and then turns around and leases the equipment to its customers, who are primarily seismic contractors in need of additional equipment for short durations.
CAPS players have keyed in on Mitcham's combination of good fundamentals and a reasonable price. Alvinpall notes the good first quarter that Mitcham just reported and says he expects more blowout quarters on the way.
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 also take a peek at 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.
