In my weekly Fool column "Get Ready for the Fall," I run Nasdaq.com's 52-week highs list through the "wisdom of crowds" meter we call Motley Fool CAPS. The result: a list of stocks that have flown so high, investors are starting to get nervous about that whole "gravity" thing. But while many stocks will indeed plunge back to Earth, some seem immune to gravity, steadily riding a rising megatrend to ever-greater heights.
Today, we'll move beyond stocks that have hit 52-week highs, and identify companies now surpassing five solid years of outperformance. Which of these will thrash the market averages for another half-decade? Here are this week's leading contenders:
|
Stock |
Recent Price |
CAPS Rating
|
Bull Factor |
|---|---|---|---|
|
Continucare Corp |
$5.07 |
***** |
98% |
|
Diamond Foods |
$35.62 |
*** |
84% |
|
Buffalo Wild Wings |
$46.16 |
*** |
93% |
|
CareFusion Corporation |
$27.50 |
*** |
89% |
|
Talecris Biotherapeutics |
$24.00 |
** |
62% |
Companies are selected from the "New 5-Year Highs" list published on MSN Money on Friday. CAPS ratings from Motley Fool CAPS.
Survivors of the zombie apocalypse
Remind me -- what year is it? Because last week gave me a serious case of 2009 flashback-itis. Yet even in the midst of last week's carnage, many stocks continued to thrive. The five named above, for instance, are all sitting right up near their five-year highs.
Interestingly, one of these names may sound familiar to you. Just a few weeks ago, we profiled top-ranked Continucare Corp as one of Wall Street's favorite stocks. And a poetic "28 days later," the Zombie Apocalypse has not only failed to eat Continucare's brains -- it's actually gifted shareholders with a 16% run-up in stock price!
The bull case for Continucare
What makes Continucare a winner? Back in December, I quoted three of the clever CAPS contributors who helped highlight this pick:
- drarnoldmorgan, who liked the company's business model of trying to "keep costs down, in the land of ... the elderly" (aka Florida).
- titliest78, who exulted over the company's "solid fundamentals" and lack of "long-term debt."
- And BornToBeBullish, who pointed out to us how Continucare's growth rate was accelerating like a rocket ship.
Room to run?
Of course, that's all great news for investors who got into the stock back when my first article ran, but with Continucare 16% more expensive now, is there any more profit to be won?
Actually, yes there is. Quite a bit more, I suspect. You see, even after the past few weeks' run-up, Continucare still sells for just 17 times earnings, and about 14 times free cash flow. It's still got $23 million in the bank, and no debt whatsoever. And yes, Fools, it's still growing at either 20% per year (in the opinion of the sole analyst venturing an opinion), or 53% (based on year-over-year growth in the last four quarters).
Meanwhile, President Obama's health-care reform efforts ran into a bit of a roadblock last week. The election of a Republican senator from Massachusetts destroyed the Democrats' 60-seat filibusterproof majority in the Senate, making it less likely that Congress will make significant changes to existing legislation. (And if you don't believe me ... just look at how investors are reacting to the news. As the S&P 500 tumbled 4% last week, health care companies like UnitedHealth
Foolish takeaway
Not to turn a great old saw on its head or anything, but the less things change, the more they stay the same. Considering how well Continucare has performed under the current health care system, I cannot help but think that a continuation of the status quo will suit this company just fine. At today's prices, I suspect it'll reward investors even better.
Agree? Disagree? Either way, here's your chance to tell us why. Click over to Motley Fool CAPS today, and sound off!
