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 resident superstar -- but what if he's playing ice-cold at the moment? So instead, you pass to the guy 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 get you only so far. I prefer to find high-quality stocks that also have some positive inertia on their side. It's like getting the ball out to your team's superstars when they do have a hot hand.
To find these league-leading winners, I cross-referenced a simple momentum screen with data from The Motley Fool CAPS investing community. Each of the stocks below has risen 30% or more over the past year, now trades within 5% of its 52-week high, and is rated highly among CAPS players.
|
Stock |
12-Month Change |
CAPS Rating (Out of 5) |
|---|---|---|
|
Flowserve (NYSE:FLS) |
87% |
***** |
|
EOG Resources (NYSE:EOG) |
79% |
**** |
|
Fluor (NYSE:FLR) |
59% |
***** |
|
ANSYS (NASDAQ:ANSS) |
59% |
***** |
|
Canadian Natural Resources (NYSE:CNQ) |
51% |
***** |
Sources: Yahoo! Finance, Capital IQ (a division of Standard & Poor's), and CAPS as of May 12.
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.
Going with the flow
Flowserve's core business is "flow control" -- it sells pumps, valves, and seals around the world for high-reliability applications in industries such as oil-and-gas and power generation.
If you're focusing on "pumps" and "oil and gas," you might guess that this is yet another company cashing in on the oil boom. That's not far from the truth, but this company also offers just as much of an opportunity to benefit from the global infrastructure build-out. In addition to the oil-and-gas business and power generation, Flowserve's products are used for chemical processes and water treatment, and more than 60% of its sales come from outside the United States.
Flowserve's end markets have been so good lately that they even persuaded Flowserve competitor Colfax (NYSE:CFX) to wade into a tough IPO environment to access the public markets.
These raging end markets, coupled with broad global diversification, led to some pretty spectacular first-quarter results recently. Year-over-year sales for the quarter increased 24%, while higher gross margins, slower growth in operating expenses, and a dollar-euro currency hedge all came together to catapult net income by 162%.
The stock also has a big CAPS fan club, with 444 bulls versus a meager 10 bears. CAPS All-Star TheStillMan found Flowserve more than a year ago and had this to say:
Flowserve will benefit enormously from two separate factors, namely the critical need to upgrade and expand existing refineries and the long term global water capacity requirements. It has manufacturing capability and skills that are second to none within its broad niche. Financials are at present decent but nothing special. Definitely a play for the future.
With the stock well more than double the price when TheStillMan wrote that pitch, and current financials to match, Flowserve has definitely delivered. Many investors think that even more good news is ahead.
So do you think Flowserve deserves a place on your All-Star team? You can share your thoughts on it, or you can check out more of what your fellow Fools had to say about it or any of the other stocks in this story, by stopping in at CAPS. While you're there, you can also take a peek at few more of the 5,500-plus other stocks that are rated on CAPS.
I think I heard a boo-yah somewhere out there -- thanks, Stuart Scott!
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