5 Rocket Stocks Worth Buying for a Q1 Rally
BALTIMORE ( Stockpickr) -- Could the S&P 500 hit new record highs in the first quarter of 2013? It's looking more and more likely by the day.
Right now, the big index is just 5% shy of the record highs that it hit back in 2007, meaning that it'll only take a bit more than the year-to-date performance the S&P posted in the first couple weeks of January again to top that high water mark for stocks. The fundamentals support a climb too. We're knee-deep in earnings season right now, and more than 70% of firms have bested analysts' estimates so far; that's a signal that Wall Street has sentiment pointed in the wrong direction in January.
Also, stocks are still cheap. Major indices are all sporting P/E multiples below their multi-year averages right now, a signal that stocks have ample room to appreciate before equity prices get "expensive." An uptick in equity inflows in the last couple of months is critical too -- it indicates that cash is starting to move from the negative real rate environment of favored risk-free assets like treasuries and back into the positive real returns of stocks again.
That's why we're taking a look at a new set of Rocket Stock names today.
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 185 weeks, our weekly list of five plays has outperformed the S&P 500 by 74.4%.
Without further ado, here's a look at this week's Rocket Stocks .
>>Buy These 5 Hates Stocks to Beat the S&P Mondelez International
Even though the name is still not that familiar to investors, Mondelez International's (MDLZ) business should be. The $50 billion former parent of Kraft Foods Group (KRFT) spun off its grocery unit last fall, breaking the firm's snack food unit into a completely separate publicly traded entity and changing its name. Mondelez owns brands such as Oreo, Cadbury, Trident gum, and Ritz crackers.
The move to split up operations makes a lot of sense, particularly for shareholders of Mondelez. Because MDLZ's brands have historically carried some of the heftier margins in Kraft, the firm stands to offer some stellar profitability improvements -- once the hangover from spinoff and acquisition costs wears off.