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 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. The performance of each of the stocks below managed to surpass the S&P 500's gains over the past month and has been rated highly by CAPS players.
|
Stock |
Four-Week Change |
12-Month Change |
CAPS Rating (Max 5) |
|---|---|---|---|
|
Suntech Power |
79.8% |
(73.3%) |
**** |
|
Garmin |
22.8% |
(62.5%) |
**** |
|
Caterpillar |
11.9% |
(64.3%) |
**** |
|
Cisco |
11.9% |
(32.3%) |
**** |
|
Pfizer |
11.3% |
(33.2%) |
**** |
Sources: Yahoo! Finance, CapitalIQ, and CAPS as of March 30.
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 Garmin.
Providing the pep
Though Garmin's stock has lost a "mere" 63% of its value over the past year, its fall from the highs of late 2007 has been an even more severe 80%-plus. It would seem the market drastically soured on the idea that personal navigation devices would be a must-have in every car around the world.
For its massive losses, Garmin's stock's performance over the past month may be a signal that it stands to see better-than-average gains as the market recovers. Even after the 23% jump, Garmin is still trading at just barely over nine times analysts' projected earnings for 2009.
Sure, the company faces myriad competition from TomTom to Honeywell, and increasingly from smartphone makers like Apple
Looking ahead
Much of the concern over Garmin seems to be that competition bit. Some CAPS members see competitors laying siege to Garmin's navigation gates and potentially turning personal navigation devices into a commodity. Though there is certainly some merit to the concern, I would suggest asking Apple about the commoditization of MP3 players or mobile phones. Garmin's personal navigation devices could become a commodity, but that would assume that the company ceases worthwhile innovation that gives customers a reason to choose the Garmin brand over others.
Despite the concerns of some CAPS members, the vast majority -- 5,094 of 5,401 total ratings -- have stayed bullish on the stock. 1eyedsquirrel is one of those bulls who managed to jump on the bandwagon when the stock was way down at $15 late last month. Here's the pitch:
The best quality/value GPS product. I spent a summer working for a GPS competitor in the 1990s and admired [Garmin] back then. I am not surprised to see what a success it has become. [Garmin] offers a great product at a competitive price and knows how to market it.
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 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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