Rocket Stocks to Buy for Earnings Season Gains

These stocks have both short-term gain catalysts and longer-term growth potential.

Earnings season is in full swing this week, with 194 S&P 500 constituents scheduled to release earnings in the next seven days. That'll more than double the number of earnings calls we've already seen hit Wall Street this quarter.

And without a doubt, it will also mean some big market moves as investors react to one of the four fundamental snapshots they get each year. So far, this quarter has been solid from an earnings standpoint. 82% of the S&P components that have already released their quarterly results have beaten analysts' expectations. If that trend continues, it could help propel the big market indices to more new all-time highs as we head into August.

To find the stocks that look best-positioned to capitalize on that earnings-season-induced momentum, we're breaking the seal on a fresh set of Rocket Stocks worth buying this week.

For the uninitiated, Rocket Stocks are our list of companies with short-term gain catalysts and longer-term growth potential. To find them, I run a weekly quantitative screen that seeks out stocks with a combination of analyst upgrades and positive earnings surprises to identify rising analyst expectations, a bullish signal for stocks in any market. After all, where analysts' expectations are increasing, institutional cash often follows. In the last 359 weeks, our weekly list of five plays has outperformed the S&P 500's record run by 78.64%.

Without further ado, here's a look at this week's Rocket Stocks.

Intel

First off is semiconductor giant Intel  (INTC) . At a glance, it looks like Intel hasn't done much of anything this year. As I write, shares are only 0.61% higher than they started the year. But that stat misses the positive trend that kicked off in Intel back in mid-February. In that five-month stretch, this stock has managed to rally almost 23% higher -- and Intel's momentum isn't showing signs of slowing as we head towards the second half of 2016.

Intel is the biggest name in the semiconductor business. The firm owns about 80% of the global microprocessor market, a toehold that gives Intel huge cash generation capabilities that, in turn, mean it's able to push more cash over to R&D than the competition can. The downside of Intel's huge exposure to microprocessors has been the slow decline of the PC business. As more consumers turn to tablets and other portable devices over conventional computers, Intel has failed to capture a meaningful share of the mobile chip market.

To counter that, Intel has actually spent more energy moving upmarket, selling more high-end server processors to keep up with growing demand for IT infrastructure that's been driven in large part by an influx of new mobile traffic. Investors are finally feeling energized about Intel's strategy, and that's starting to play out in the price action this summer.

International Paper

$18.7 billion paper and packaging stock International Paper  (IP)  is one of the big earnings stocks to watch this week. The firm releases its second-quarter earnings numbers on Thursday morning. Not that International Paper needs much in the way of upside catalysts this year; shares are up 20% year-to-date, making their way higher after a long-term correction in 2015. Shares still have room to keep up their rebound this summer.

International Paper is one of the biggest names in the paper and packaging business. The firm's products make up approximately a third of the North American corrugated cardboard packaging market and another quarter of the market for printer paper sheets. In other words, even if you don't put a whole lot of thought into who supplies your paper and packaging products, there's a very good chance you've come into contact with some of IP's offerings recently. Today, approximately 75% of sales are earned in the North American market, but International Paper also has substantial operations in a handful of big emerging market economies.

IP is pursuing a growth-through-acquisition strategy this year, announcing in May that it had agreed to pay $2.2 billion for Weyerhaeuser's fluff pulp assets. That increased capacity should have a positive impact on International Paper's bottom line without overly burdening the balance sheet.

Without a doubt, paper isn't the most exciting business on our Rocket Stocks list, but International Paper's price action has been a lot more exciting in 2016 -- and with rising analyst sentiment in shares, we're adding this big industrial name to our Rocket Stocks list for the second time in 2016.

Equifax

Credit ratings agency Equifax  (EFX)  is another large-cap stock that's been rallying hard in 2016. Year-to-date, Equifax shareholders have seen their holdings rally nearly 22%, outpacing the rest of the broad market by a huge margin. And as Equifax hovers at lifetime highs this month, that bullish momentum isn't showing any signs of waning.

Equifax is one of the big credit database providers. Even if you're not familiar with the financial situation over at Equifax, there's a pretty good chance that they're familiar with yours. That's because Equifax collects and analyzes credit data on more than 800 million consumers and 88 million businesses around the world. Equifax is benefiting from new and novel uses of credit data. As non-lender customers such as insurance companies, employers, property management firms and others begin using credit-worthiness data more regularly for their own risk management, EFX opens up a big new market.

5 Rocket Stocks to Buy in July

BALTIMORE (Stockpickr) -- Greece is yet again the center of attention to start the week today, following the country's surprise "no" vote against austerity measures. The referendum results are having a negative effect in Eurozone markets, and U.S. stocks opened lower this morning.

When stocks are getting pummeled by the news, it makes sense to focus on strength.

To do that, we're turning to a fresh set of "Rocket Stocks" worth owning in July.

For the uninitiated, Rocket Stocks are our list of companies with short-term gain catalysts and longer-term growth potential. To find them, I run a weekly quantitative screen that seeks out stocks with a combination of analyst upgrades and positive earnings surprises to identify rising analyst expectations, a bullish signal for stocks in any market. After all, where analysts' expectations are increasing, institutional cash often follows.

In the last 305 weeks, our weekly list of five plays has outperformed the S&P 500's record run by 77.05%.

Without further ado, here's a look at this week's Rocket Stocks.



PepsiCo

PEP data by YCharts

Up first is snack food and beverage giant PepsiCo (PEP - Get Report). PepsiCo owns a big swath of the shelf space at your local grocery store. The firm's namesake Pepsi arm is the No. 2 beverage company in the world, and its Frito-Lay unit is the biggest snack manufacturer on the planet. The firm's huge portfolio of brands includes everything from Pepsi to Gatorade and Tropicana on the beverage front and Lay's, Doritos and Quaker on the snack side.

The duality of Pepsi's business has created a bit of a battle with key shareholders lately. Activist shareholders have fought to split the firm in two, arguing that there's value to be unlocked by breaking drinks and snacks apart. But management has been adamant about the economies of scale that PepsiCo generates by basically moving twice as much product as it would as two companies (revenues are pretty evenly split between the snack and beverage units).

Either way, Pepsi remains well-positioned in 2015. The firm's revenue has been decidedly U.S.-centric historically, with consumers here at home accounting for just over half of all sales. As growing middle class populations in emerging markets increase their soft drink and snack food consumption, Pepsi is on track to keep meaningfully moving the growth needle in the coming quarters.

With rising analyst sentiment in shares this week, we're betting on PepsiCo.

O'Reilly Automotive

ORLY data by YCharts

2015 has been a stellar year so far for shareholders in O'Reilly Automotive (ORLY - Get Report). Since the calendar flipped to January, this car parts retailer has rallied more than 20%, leaving the big market averages in its dust. And as shares press up against new highs this summer, there's reason to expect that bullish trend to continue.

O'Reilly Automotive is the second-biggest auto parts store in the country, with more than 4,000 stores from coast to coast. The firm caters to both retail DIY consumers and to commercial auto shops, exposure that puts O'Reilly a step ahead of peers that have been slow to pursue the $60 billion market for independent auto shop suppliers. A series of large acquisitions over the last several years has given O'Reilly an enviable geographic footprint, all while keeping its balance sheet leverage down to a very tenable $923 million in net debt.

From a macro standpoint, O'Reilly is in an enviable position. The average age of the U.S. car fleet is older than ever before, andinterest rate hikes are on the horizon. That makes the economics of prolonging the lifespan of an existing vehicle increasingly more attractive than upgrading to a new one. That spending should make its way to O'Reilly Automotive's income statement in the quarters ahead.

Edison International

EIX data by YCharts

Electric utility Edison International (EIX - Get Report) supplies power to approximately 14 million residents in Southern California. That's an attractive business to be in, though not necessarily an easy one. For instance, while power demand is high and rates are attractive, the region's infrastructure is expensive to keep up -- so much so that the firm's merchant power generation business went bankrupt. That brouhaha didn't get resolved until last November.

But as those black clouds clear, Edison International is suddenly looking a whole lot more attractive. The firm is following the track of many other utility stocks (intentional or not), by moving more of its exposure to the regulated side of the business, trading off the potential for windfall profitability in good times in exchange for consistent performance and dividend creation. Now that Edison International is fully regulated, the surprises should be rare.

At this point, Edison still has significant investments to make in its aging energy infrastructure, but current power rates allow for attractive guaranteed rates of return on those big investments. Edison has underperformed the rest of the utility sector in 2015, but bullish sentiment is finally starting to come back into this $19 billion energy company.

With shares yielding right around 3%, the market may finally be satisfied with the haircut this stock has taken. Shares could be headed for higher ground this summer.

Ingersoll-Rand

IR data by YCharts

Diversified manufacturer Ingersoll-Rand (IR - Get Report) is showing a deceptively solid performance in 2015. With dividends factored in, Ingersoll-Rand's shares have paid out total returns of more than 7% so far in 2015, putting this $18 billion firm on track to generate returns in the mid-teens by the end of the year. That's some pretty meaningful outperformance for a year when performance has been pretty hard to come by.

Ingersoll-Rand owns a diverse collection of brands that includes Trane air conditioners, American Standard bathroom fixtures, Club Car golf carts, and its namesake line of industrial equipment. Trane is Ingersoll-Rand's biggest unit, at more than 60% of sales – with housing data coming back strong this year, that positioning should pay off for shareholders. The firm's brands are the league leaders in their respective niches, resulting in a firm that's stronger than the sum of its parts.

Even though interest rates are likely to turn higher in the next 12 months, they still remain extremely low compared to historical levels, and that's a good thing for Ingersoll-Rand's capital-intense product lines. It's true that Ingersoll-Rand's business lines tend to be cyclical, but with the Fed likely to be slow to hike rates, the business cycle should get prolonged this time around, boosting Ingersoll-Rand's profitability in the process.

Ingersoll-Rand isn't hitting home runs in 2015, but investors should be looking for another single in the second half of the year.

Lululemon

LULU data by YCharts

Last up on our list of Rocket Stocks is Lululemon (LULU - Get Report), the $9.2 billion athletic apparel stock. 2015 has been a building year for Lululemon. After pretty rough performance last year, shares are finally growing into their valuation this year, resulting in nearly 17% upside since the calendar flipped to January. Even though competition may be stiff in the athletic apparel business, Lululemon is leveraging a powerful brand to compete against the incumbents -- and it's winning.

Lululemon manufactures and sells athletic apparel, with a bent towards yoga. The firm's company-owned store count has moved through 300, giving Lululemon a wide reach for high-margin retail. By building a brand that consumers can relate to (and are willing to pay a premium for), the firm has been able to compete against much bigger names who've failed to see yoga as a "lifestyle sport." It doesn't really matter that the firm's products don't have much of a moat. At this point, Lululemon's branding in the space is tough to unseat.

One of the really appealing parts of Lululemon's growth story is the fact that this company has been able to finance its expansion through equity and earnings, not debt. Instead the firm carries $655 million in net cash on its balance sheet, a material risk-reducer for investors who opt to buy.

With rising analyst sentiment building in Lululemon this week, we're betting on shares.

By Jonas Elmerraji 

Source: http://www.thestreet.com/story/13208545/1/5-rocket-stocks-to-buy-in-july.html?kval=dontmiss

5 Rocket Stocks That Are Ready for Blastoff

BALTIMORE (Stockpickr) -- There's something that the big market indices aren't telling you this summer.

At a glance, May looked like a pretty weak month for the broad market. After all, the big S&P 500 index barely managed to move a full percentage point higher for the month, hardly tacking anything onto pretty paltry 1.64% price gains year-to-date.

Must Read: Warren Buffett's Top 10 Dividend Stocks

But while the broad market was showing investors a mediocre move, lots of individual names were in rally mode.

For example, a full 20% of S&P 500 components actually moved 5% higher or more during the month of May. And one in 10 S&P stocks actually climbed by 10% or more for the month. That's a huge chunk of the market that's making big moves right now.

To find the ones primed for similar upside in June, we're turning to a fresh set of Rocket Stocks worth buying this week.

For the uninitiated, "Rocket Stocks" are our list of companies with short-term gain catalysts and longer-term growth potential. To find them, I run a weekly quantitative screen that seeks out stocks with a combination of analyst upgrades and positive earnings surprises to identify rising analyst expectations, a bullish signal for stocks in any market. After all, where analysts' expectations are increasing, institutional cash often follows. In the last 302 weeks, our weekly list of five plays has outperformed the S&P 500's record run by 76.40%.

Without further ado, here's a look at this week's Rocket Stocks.

Must Read: 5 Stocks That Could Be Toxic to Your Portfolio

Citigroup

Looking at the year-to-date numbers, Citigroup's (C - Get Report) run is decent at best. Shares are up about 4% since the calendar flipped to 2015, but that number is a little misleading. In fact, since shares bottomed back in early February, this huge bank has actually managed to rally more than 20%. Clearly, Citi is looking pretty bullish over the intermediate term.

And why shouldn't it? Citigroup is one of the biggest banks in the world, with more than $1.89 trillion in assets. That's been an attractive business in recent years, thanks to access to extremely cheap deposits and growth in lending businesses that generally pay banks bigger lending spreads. With the possibility of a Federal Reserve interest rate hike in the intermediate term, banks such as Citi have the possibility of widening that spread even further, earning returns on equity that are more in line with their historical averages. (That said, boosted capital requirements mean that banking industry returns will still be lower than their pre-2007 numbers going forward.)

Of the big U.S. banks, Citigroup is the one with the most exposure to emerging markets. Citi has big operations in Asia and Latin America, a fact that should parlay into outsized returns over the long-term. Meanwhile, an improved balance sheet and more emphasis on fee-based businesses should boost Citi's legacy U.S. profitability in the coming years.

With rising analyst sentiment coming into this Rocket Stock this week, we're betting on shares. For more on Citigroup, read "Stock Correction May Be Coming, Citigroup Remains Attractive Buy."

Must Read: Hedge Funds Hate These 5 Stocks -- but Should You?

Salesforce.com

Salesforce.com (CRM - Get Report) is having an interesting year in 2015. Since the beginning of the year, CRM has rallied more than 24%, boosted in large part by speculation that the $48 billion software company would find a suitor willing to acquire it for a hefty premium. Talks with Microsoft (MSFT) reportedly broke down last month, in addition to acquisition discussions with other unnamed companies. But even though Salesforce is still for sale, there's reason to believe that more upside lies ahead.

Salesforce builds Internet-based software that enables more than 100,000 customers to run business applications that interact with their customer lists, doing everything from sending newsletters to tracking sales. Because CRM sells software-as-a-service, the firm enjoys a sticky, recurring revenue base with very high switching costs.

CRM has historically pursued growth at the expense of profitability, a strategy that masks the underlying profitability of its business. But with a balance sheet that's basically debt-neutral and deep margins higher up the income statement, Salesforce likely has a lot more wherewithal than most of its detractors imagine.

CEO Mark Benioff reportedly wants $70 billion to take his company off the market. The question is whether CRM will hit that market valuation number by itself before it finds another bidder.

Must Read: 5 Stocks Warren Buffett Is Selling

Norwegian Cruise Line Holdings

It's cruising season, and that means that it's high time for $13 billion cruise operator Norwegian Cruise Line Holdings (NCLH - Get Report).

Norwegian is the No. 3 cruise line in terms of capacity. The firm currently has more than 40,000 berths spread across its fleet of 21 ships. It operates cruises under the Norwegian, Oceania, and Regent Seven Seas banners, sailing to more than 430 vacation destinations around the world.

Being smaller than the industry leaders has some distinct advantages. For instance, on a relative basis, NCLH currently has more new ship capacity on order than its bigger peers, which means that the fleet is transitioning younger more quickly. That's a big selling point for consumers that's extremely costly for those bigger peers to replicate, and it means that the firm can collect higher fares for its cruise offerings. On the expense side of the equation, prolonged low oil prices and interest rates are creating a perfect storm of profitability for NCLH this year.

Buyers are clearly in control of NCLH right now. Year-to-date, this big stock has rallied almost 18% already. This week, we're betting on shares.

McCormick

McCormick (MKC - Get Report) is the dominant company in the food spice and seasoning market. That may not sound like an especially exciting business, until you think about the fact that this $10 billion consumer staple dominates one of the highest-margin aisles in your local grocery store. The firm's leading brands include Old Bay, Zatarain's and Thai Kitchen in addition to the McCormick label.

The grocery business is McCormick's bread and butter. The firm doesn't just sell spices, seasonings and flavorings under its own brands. MKC is also one of the biggest private-label manufacturers, which means that it uses its huge supply chain capabilities to manufacture store brands as well, effectively wringing the competition out of the business and contributing to about 10% of the firm's consumer sales. Newer convenience-focused products should help McCormick move the growth needle in 2015.

Besides grocery, McCormick also serves restaurant chains and packaged food firms that use its seasonings in their respective products. Because few firms can boast MKC's operational expertise with spices, it's a go-to firm for clients who need help developing and mass-producing the seasonings they use in large-scale food manufacturing. 

Meanwhile, heavy marketing spending over the last 12 months should parlay into better brand awareness on MKC's newer, higher-margin consumer products.

Must Read: Warren Buffett's Top 10 Stock Buys

Global Payments

Last, but certainly not least, is Global Payments (GPN). This $7 billion payment processor has been in rally-mode all year long in 2015, climbing more that 30% since the start of the year. That's about twenty-times better than the broad market has fared over that same timeframe, which adds up to an astronomical amount of outperformance.

Global Payments acts as a middleman between merchants and banking institutions, giving it an important role in the world's credit card infrastructure. The firm helps more than a million individual merchants accept card payments from their customers. As more payments move electronic, GPN is enjoying a rising tide that should continue to lift all ships in the space. By collecting a tiny piece of a huge number of transactions, GPN generated more than $2.5 billion in revenues last year.

Right now, North America still adds up to about 70% of GPN's revenues, a fact that leaves a lot of open growth potential as the firm seeks more business overseas. That's not to say that growth in the U.S. has been sluggish. A skew toward small and midsize merchants here at home provided sales growth rates near 15% over the last year. 

Look out for a potential catalyst later this summer when GPN reports its fourth-quarter numbers.

By Jonas Elmerraji 

Source: http://www.thestreet.com/story/13177676/1/5-rocket-stocks-that-are-ready-for-blastoff.html