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 currently have a fiery shooting hand. 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.
|
Stock |
12-Month Change |
Percent Below 52-Week High |
CAPS Rating (out of 5) |
|---|---|---|---|
|
Dade Behring Holdings |
82.6% |
1.2% |
***** |
|
Companhia de Saneamento Basico do Estado de Sao Paulo |
100.1% |
3.4% |
***** |
|
Trimble Navigation |
56.4% |
2.7% |
***** |
|
Raytheon |
30.7% |
1.4% |
**** |
|
Boston
Beer |
51.6% |
1.8% |
***** |
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.
International investing gets basico
At this point, most investors know that the United States isn't the only game in town when it comes to finding great stocks. In fact, if you ask Bill Mann over at our Motley Fool Global Gains service, he may chime in that in many cases, the U.S. isn't even the best game in town. Though there are still plenty of great stocks inside the U.S. borders, strong growth and plenty of innovation outside the country are creating some great opportunities for investors willing to broaden their horizons.
A lot of the foreign stocks on the tips of people's tongues are exciting, sexy firms like China's Baidu.com or India's Infosys Technologies. While those stocks are good for grabbing headlines, some much more boring companies in some very exciting places might also be worth a look.
Roughly translated, Companhia de Saneamento Basico do Estado de Sao Paulo means simply "the company of basic sanitation in the state of Sao Paulo." Sao Paulo, of course, is the largest state by population and GDP in Brazil -- which is part of the so called BRIC (Brazil, Russia, India, China) block of high-growth countries.
The story is simple yet effective -- the company supplies water to roughly 60% of the state of Sao Paulo, and sewage services to 18.5 million people in the state. The company has been growing its revenue at roughly 10% per year since 2002, and it produces an impressive EBITDA margin in the mid-40% range. The company's strategy going forward includes streamlining operations to increase profitability, as well as expanding its services into new municipalities within the state.
CAPS player slbutton points out that the company is owned largely by the state, which can be a blessing and a curse. But slbutton also highlights the importance of "clean, potable water," the stock's reasonable valuation, and that the "growth prospects [are] downright exciting for a utility."
So does Saneamento Basico deserve a place on your All-Star team? You can share your thoughts, or check out more of what your fellow Fools have 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 4,900 other stocks that are rated on CAPS.
I think I heard a "booyah" somewhere out there - thanks, Stuart Scott!
More CAPS Foolishness:
Baidu is a Motley Fool Rule Breakers pick.
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.
