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's ready to have his Santonio Holmes moment and 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 inertia on their side. It's like getting the ball out to your team's superstars when they do have a hot hand.
There's no doubt that now's a tough time to try and find winners out there, but to find the current league leaders, I ran a simple momentum screen on The Motley Fool's CAPS screener. Each of the stocks below was up over the past four weeks -- despite the S&P's big double-digit loss -- and has been rated highly by CAPS players.
|
Stock |
Four-Week Change |
12-Month Change |
CAPS Rating (Max 5) |
|---|---|---|---|
|
Terra Industries |
14.4% |
(54.5%) |
**** |
|
Noble Corp |
12.8% |
(40.8%) |
***** |
|
Thermo Fisher Scientific |
1.4% |
(31.6%) |
***** |
|
Stryker |
1.2% |
(38.4%) |
***** |
|
Republic Services |
0.8% |
(16.4%) |
***** |
Sources: Yahoo! Finance, Capital IQ, and CAPS as of Feb. 2.
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. In fact, I'll even kick off your research with a look at Stryker.
Providing the pep
It seems a distant memory now that we could ever shrug when a company met its earnings expectations. Today, with the economy on the rocks, major financial institutions like Citigroup
Stryker did us one better, though, and projected that its sales -- assuming currencies stays put -- would climb 6% to 9% this year and earnings per share would jump 10% to 14%. Though some folks feeling the economic pinch may put off an elective knee replacement surgery, it seems that there is more than enough non-elective health care action going on that requires Stryker's products. And with a rapidly aging population in the U.S., it's probably not a bad bet that this dynamic will continue.
Looking ahead
You're certainly not going to get unanimous agreement on the future of a company or a stock. However, with 1,066 CAPS members currently rating Stryker an outperformer, versus 28 disagreeing, it's hard to get too much closer to unanimity. MattH42004 is one of those thousand Stryker fans, recently chiming in with this comment:
When it comes to Stryker there's a lot for any investor to like. With the uncertainty in the financial markets, maybe the best thing the company has going for it is one of the strongest balance sheets in the entire health care industry. Currently, the have 2.2 billion worth of cash sitting on the balance sheet to finance growth, through increased R&D or acquisition. They also have a paltry 21 million in debt coming due over the next five years, in these times you can't ask for much better than that. Stryker also has tremendous management, with almost 40% insider ownership, that has led to consistent 10% revenue growth and strong yearly cash flows. The company also has demographics on its side. An aging population is in continual need for Stryker's orthopedic products, and any form of increased government health care will only increase the demand for these products.
Now if you were to ask me, I'd prefer that Stryker make like Novartis
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 it or check out more of what your fellow Fools had to say about it or any of the other stocks above by stopping by CAPS. And while you're there you can also take a peek at few more of the 5,400-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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