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) |
|---|---|---|---|
|
Celanese |
115.2% |
0.0% |
**** |
|
Strayer Education |
36.6% |
0.0% |
*** |
|
Quanex |
32.8% |
0.0% |
***** |
|
Cytec Industries |
31.8% |
0.0% |
**** |
|
Fastenal |
30.1% |
0.0% |
***** |
At first glance, this sure looks like a high 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.
Education paying off
If you aren't still paying off student loans from your higher education, there's a good chance you're already saving for college for your kids -- whether or not they're born yet. The growing percentage of Americans getting some sort of post-secondary education has been helping to push up the cost at many institutions. For Foolish investors, a trend like that is worth tapping into.
Strayer has been around since 1892 and offers a variety of post-secondary schooling, from undergraduate diploma programs to graduate master's programs. CAPS player Robert628496 sounded off on Strayer's potential more than a year ago:
I believe that the future of degree programs for working adults resides in the for-profit sector. In my view, Strayer is beautifully positioned, in terms of their product, their management, and their business operation to ride this rocket to great heights. What I really like about Strayer is that it is just at the beginning of its growth cycle ... I am quite confident that they will outpace the S&P 500 for years to come.
After finishing out 2006 with revenue up 20%, the company started out 2007 on a good note -- the top and bottom line were up 20% and 18%, respectively, in the first quarter. Strayer is scheduled to report earnings later this month, so investors will soon have more recent financial data to chew on. If the company hits the $1.14 in earnings per share that Wall Street is projecting, it would notch another quarter of year-over-year earnings growth in the high teens.
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 4,700 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.
