5 All-Star Stocks on Fire

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's CAPS investing community. Each of the companies below is up 30% or more over the past year, now trades within 5% of its 52-week high, and has been rated highly by CAPS players.

Sources: Yahoo! Finance, Capital IQ (a division of Standard & Poor's), and CAPS as of June 23.

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.

Am I too late?
The question on the tips of tongues everywhere is whether it's too late to be investing in the energy boom. Well, that and whether Heath Ledger will get an Oscar nod for Dark Night, but we'll stick to the energy question.

Now I'm not just talking about the obvious megacap players, such as Exxon (NYSE:XOM) and Chevron (NYSE:CVX). Though their stocks have done well over the past year, they've been left in the dust by a legion of drillers, independent explorers, and equipment makers. Not least among them is National Oilwell Varco, which sells drilling equipment and supplies and has been on quite a tear over the past year.

NOV has grown like a weed through a combination of acquisitions and smoking-hot demand for its products. Total revenue in 2007 was more than quadruple what it was in 2004, and profits have multiplied more than 10 times. And it's set to get even more massive when it fully integrates the $7.4 billion acquisition of Grant Prideco.

The billion-dollar question in my mind, though, is whether the runaway train of oil prices can stay on the tracks. NOV has a great business, but if oil prices start to fall, there's little doubt that new orders may start to dry up and its backlog could also take a hit. And while the trailing price-to-earnings (P/E) multiple of 21 is reasonable when compared to the stock's trading history, it's important to remember that the "E" in that P/E are on what could be peak sales and margins.

Most CAPS players do not share my concerns about NOV's future and currently there are more than 1,600 CAPS players that call the stock an outperformer versus just 33 that think it will lag the market. CAPS player skyscrewer recently quipped that "the need for energy will never abate," while CAPS All-Star Cuchulainn1 cited strong demand as a reason for his bullishness: 

NOV has a near monopoly on offshore oil rig construction. Brazil is buying up many of the existing rigs for their major offshore find creating a shortage of oil rigs. I suppose it's just a coincidence that NOV reported a record backlog this quarter.

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 or check out what your fellow Fools had to say about any of 5,500 stocks rated on CAPS.

I think I heard a "booyah" somewhere out there -- thanks, Stuart Scott!

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