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 only get you so far. I prefer to find high-quality stocks that also have some positive movement on their side. It's like kicking 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.
|
Stock |
12-Month Change |
Percent Below 52-Week High |
CAPS Rating (5 max) |
|---|---|---|---|
|
GMX Resources (NASDAQ:GMXR) |
151.8% |
3.1% |
**** |
|
Central European Distribution (NASDAQ:CEDC) |
98.5% |
3.1% |
***** |
|
Amedisys (NASDAQ:AMED) |
49.6% |
0.4% |
***** |
|
Anheuser-Busch (NYSE:BUD) |
31.6% |
1.0% |
**** |
|
Energen (NYSE:EGN) |
30.8% |
3.7% |
***** |
Sources: Yahoo! Finance; Capital IQ, a division of Standard & Poor's; and CAPS as of July 14.
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.
A Bud for Belgium
If you've been away from every news source known to man for the past few weeks, you might have missed the reason why Anheuser-Busch's stock has managed to avoid the sharp declines of other consumer brands like Nike (NYSE:NKE) and Coke (NYSE:KO). On Sunday night, Belgium's InBev finally clinched its takeover of the house that Bud built by boosting its offer to $70 per share.
So even though CAPS members still love the business behind Anheuser-Busch, unless something terrible goes wrong with the merger, the only profit left to be made is the 4.7% gap between the current share price and InBev's offer. While any profit at all might seem enticing in this market, I'd only suggest chasing that one if you know the ropes when it comes to merger arbitrage.
Health care moves in
If merger arb (as the pros call it) isn't your thing, then Motley Fool Stock Advisor pick Amedisys may be worth a look. The company provides home health-care and hospice services to the chronically ill and elderly, and it makes almost 90% of its revenue from Medicare. In a tough economy, there are few businesses that you can really count on, but this is one of them.
Back in late April, the company announced a stellar quarter, with revenue and net income up 39% and 24%, respectively. It also bumped up its full-year outlook. We'll get a good view of how it's holding to that rosy prediction when it announces earnings later this month.
The stock also has a solid following on CAPS, with 691 members positive on its prospects, versus just 13 who think it will lag the rest of the market. CAPS All-Star claygrant1974 is one of the Amedisys bulls, and he pitched his support back in February:
No brainer. Baby Boomers (and other significant demographic groups) are getting older and will die. This company is strong and getting bigger in growing trend of home health care and hospice, favored by population as a whole and [the government].
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 on them, or check out more of what your fellow Fools had to say about these or any of the other stocks above, by stopping by CAPS. And while you're there, take a peek at few more of the 5,500 other stocks our community has rated.
I think I heard a booyah somewhere out there -- thanks, Stuart Scott!
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