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 will 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 kicking 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 showed positive returns over the past four weeks -- despite the S&P's massive loss -- and has been rated highly by CAPS players.
|
Stock |
Four-Week Change |
12-Month Change |
CAPS Rating (Max 5) |
|---|---|---|---|
|
Genentech |
12.0% |
16.7% |
**** |
|
Freeport-McMoRan |
10.2% |
(67.6%) |
***** |
|
Suncor Energy |
8.7% |
(56.6%) |
***** |
|
Hansen Natural |
1.0% |
(11.7%) |
**** |
|
Quality Systems |
0.8% |
17.6% |
***** |
Sources: Yahoo! Finance, Capital IQ, and CAPS as of March 9.
At first glance, this sure looks like a high-quality group. But, as always, I strongly 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 Freeport-McMoRan.
Providing the pep
If the commodities bubble of 2008 were drawn in pictures, it'd look a lot like a Wile E. Coyote cartoon. Prices ran right over the edge of the cliff and just kept going for a while, until investors finally started to look around and realize just how far they had to fall. And fall they did. As commodity prices tumbled, so did stocks like Halliburton
Today, however, the picture looks a bit different. The drop in commodity prices caused many wily commodity investors to run for the exits to try to avoid the massacre, and this may have taken prices down even further than they needed to fall. Recently, oil and metals like copper appear to have started gathering themselves up from the various craters they left in the ground. At the same time, gold, though off its highs, is still considered a safe haven for many investors. This is all good news for a producer of copper, gold, and other metals such as Freeport.
The call from CAPS
Freeport is a favorite on CAPS, sporting a perfect five-star rating nearly nonstop for the past two years. In fact, more than 97% of the CAPS members that have weighed in on Freeport have called it an outperformer. CAPS member schowlera gave Freeport a thumbs up last month and said:
Good company long term, involved in "real" products. Copper has been hammered and may be continue to be in the short term, though I am not investing to sell in 2 weeks or even 2 years and neither am I playing the commodities market to bet on the short term price of copper. However, I will put my money in this effectively managed company which provides essential materials for long term and ongoing infrastructure development.
This reasoning rings pretty true for me. While it's going to be difficult to predict exact metals prices tomorrow, or even a year from now, we can say with some certainty that 10 years from now, metals like copper, gold, and silver will not only remain in use, but also be used in greater quantities. With metals prices down to more reasonable levels, now looks like a good time to be picking up high-quality miners like Freeport.
Fielding your team
So, do you think any (or all!) of these companies deserves 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 5,300-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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