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5 All-Star Stocks Fighting the Tide

By Matt Koppenheffer - Updated Apr 5, 2017 at 8:05PM

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What's better than a high-quality stock? A high-quality stock that's shrugging off the market's declines!

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. Each of the companies below was up by a double-digit percentage over the past four weeks -- despite the S&P's big loss -- and has been rated highly by CAPS players.


4-Week Change

12-Month Change

CAPS Rating (out of 5)

Vaalco Energy (NYSE:EGY)








American Science & Engineering




Aluminum Corp of China (NYSE:ACH)




Brasil Telecom




Sources: Yahoo! Finance, Capital IQ, and CAPS as of Dec. 1.

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 Cogent.

Providing the pep
In recessionary times (remember, it's official now!), all technology companies are simply not created equal. Giants like Dell (NYSE:DELL) and Microsoft (NASDAQ:MSFT) have seen their stocks hit hard by the expectation that businesses and consumers alike will be donning their long-hidden Puritan garb and keeping more of their hard-earned money in their pockets. Even a flashy favorite like Apple (NASDAQ:AAPL) couldn't hide from the market's hammer -- its stock has been cut in half over the past year, as investors worried that iPod- and iPhone-happy consumers would, well, no longer be so happy.

If a stock could chortle, then Cogent would likely be doing so right about now. Cogent is categorized broadly as a tech company, but its focus is on fingerprint identification systems used by governments and law enforcement agencies around the world. The way Cogent puts it, its products help prevent fraud and security breaches that "can cause economic harm and loss of life." In other words, Cogent's products are way down on the list when it comes to making budget cuts, leaving it plenty of room for chortling while others are sweating.

Cogent showed its recession-fighting power in early November, when it released its third-quarter results. Revenue for the quarter was up 56% from the prior year, and net income nearly tripled. And my oh my, what a balance sheet this company has -- if $450 million-plus of cash and investments against no debt can't get it through this recession, then we all better start buying bottled water.

Looking ahead
As you might expect, peace of mind is dear in this market, and thanks to Cogent's strong and stable performance, its stock isn't particularly cheap today. The stock currently trades at just more than 25 times analysts' 2008 earnings expectations, and more than 23 times 2009 estimates -- and this is at a time when companies like Microsoft and Dell are trading at single-digit multiples.

However, the fact that Cogent is likely to hold up much better than most companies out there is no small matter. It's also sitting on that massive cash hoard, and if we back that out of the valuation, the numbers start to look a lot more interesting.

CAPS members don't need any convincing on Cogent, though. More than 96% of the 565 members who have rated the stock are bullish on it. CAPS member 881500 gave the most recent thumbs-up on the stock, seeming to express approval of the company that Cogent keeps:

I like cogent because it offers unlimited data stream to commercial customers and acts like a heavyweight. I also like it because it is considered a partner of the [Cisco (NASDAQ:CSCO)] clan, and I expect cisco hardware to succeed even in poor buisness environments.

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, 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 “booyah” somewhere out there – thanks, Stuart Scott!

More CAPS Foolishness:

Cogent is a Motley Fool Hidden Gems Pay Dirt recommendation. Microsoft and Dell are Inside Value picks. American Science & Engineering is a Rule Breakers recommendation. Apple is a Stock Advisor selection. Try any of our Foolish newsletters today, free for 30 days.

When it comes to basketball, Fool contributor Matt Koppenheffer might be the guy Ron Shelton was thinking of when he came up with the title White Men Can't Jump. He does not own shares of any of the companies mentioned. The Fool’s disclosure policy has a 55'' vertical jump and can dunk from half court. Or so I hear.

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Stocks Mentioned

Microsoft Corporation Stock Quote
Microsoft Corporation
$291.91 (1.70%) $4.89
Apple Inc. Stock Quote
Apple Inc.
$172.10 (2.14%) $3.61
Cisco Systems, Inc. Stock Quote
Cisco Systems, Inc.
$46.61 (1.55%) $0.71
Aluminum Corporation of China Limited Stock Quote
Aluminum Corporation of China Limited
$9.16 (-0.76%) $0.07
VAALCO Energy, Inc. Stock Quote
VAALCO Energy, Inc.
$5.24 (0.77%) $0.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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