5 All-Star Stocks on Fire

The clock's ticking down, your team's down one, you're being double-teamed, and you wouldn't have enough time to get off a good shot even if you were allowed to drop-kick both defenders. So who do you dish the rock to?

Your first thought might be the resident superstar -- the Kobe Bryant or LeBron James. But what if Kobe, as good as Kobe is, is playing colder than an Alaskan snowdrift? That's right, you dish to the guy with the hot hand, the guy who will be deemed en fuego tomorrow on ESPN.

Momentum investors are looking for stocks in a similar state of sizzle when they make investments. They want to give the nod to the stocks that are hot to the touch.

But momentum by itself will only get you so far. What sounds more interesting to me than simply looking for stocks that have momentum is finding high-quality stocks that also have some positive inertia on their side. It's like kicking the ball out to Michael Jordan or Larry Bird when they do have a hot hand.

To find these high-quality winners, I cross-referenced a pretty simple momentum screen with data from The Motley Fool's new investing community, CAPS. The result is a starting lineup of all-star stocks that all have a fiery shooting hand right now. Each of the companies below is up 30% or more over the past year, is within 5% of its 52-week high, and has been rated highly by CAPS players.

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.

Tech's trek upward
Motley Fool Rule Breakers selection Sigma Designs is one of the many tech stocks that have recently caught a tailwind as investors have realized that the likes of KB Home (NYSE:KBH) and Countrywide Financial (NYSE:CFC) aren't going to bounce back quite as quickly as hoped. In fact, while the mortgage and housing industries continue to struggle, tech companies have been issuing the kind of positive news that investors have been really wanting for over the past few months.

In Sigma's case, strong second-quarter earnings sent the stock price up. For the quarter, the company reported revenue that was up 18% over the previous quarter and 111% over the prior year. Net income grew even faster, and the $0.48 per share (non-GAAP) that Sigma notched was well above the $0.35 that Wall Street was looking for.

Multiple players on CAPS like the company's position in the burgeoning IPTV (Internet protocol TV) market, including CAPS All-Star Ganndalf. Last month, he pointed out the company's 16% profit margins over the past 12 months and the projected 28% annual growth over the next five years. He also said that "IPTV is this company's main driver, and it is going to be HUGE over the next 10 years ... Right now Sigma is the top dog [in IPTV]."

So does Sigma Designs 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 5,000 other stocks that are rated.

I think I heard a boo-yah somewhere out there -- thanks, Stuart Scott!

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