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5 Rocket Stocks to Buy Before the World Ends

Tickers in this article: CBS MA MYL PAY TXN

5 Rocket Stocks to Buy Before the World Ends

BALTIMORE ( Stockpickr) -- Between the end of the world on Friday and the Fiscal Cliff clock ticking down to the wire, it may seem surprising to some that the S&P 500 is managing to hold its ground just 3% and change off from its Fall 2012 highs. But there's more to Mr. Market's machinations than just those two factors.

End of the world talk aside, the fiscal cliff has been accompanied by much less volatility than the debt ceiling debacle ushered in last year. Part of the reason for that is the fact that most fear selling of stocks has already happened. We came into this quarter with the investor sentiment skewed definitively against equities, and historically that's been a good indication that stocks were about to start a new primary trend higher.

Ignoring the economic impact of the cliff, income investors are unlikely to unload stocks because of the cliff for one simple reason: there isn't a good alternative.

With interest rates being held near zero, equities are the last bastion of positive real returns for scores of investors. So, while sentiment is still against stocks right now (a good contrarian indicator ), investors are realizing that they hate other asset classes even more.

That's why we're turning to a new set of Rocket Stock names 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 180 weeks, our weekly list of five plays has outperformed the S&P 500 by 74.8%.

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


MasterCard (MA) is having a strong showing in 2012 -- shares of the $60 billion payment network have rallied around 30% since the first trading day in January, buoyed by strong fundamental performance this year. MasterCard is the number-two payment card network in the word, behind standard-bearer Visa (V) , with around 31% of the world's credit cards carrying a MasterCard logo.

The payment network business is lucrative for a few reasons. First, it's important to remember that MasterCard is the network, not the card issuer. Since it doesn't extend credit itself (its partner banks do), it doesn't carry any credit risk on its balance sheet. Instead, MasterCard earns its money by taking a tiny cut of every transaction that it facilitates, taking huge margins for its trouble. Because barriers to entry are extremely high for the payment card business, it's unlikely that we'll see any unfamiliar names eating share from MA and its big peers -- even though newcomers like PayPal and Google (GOOG) are making a presence in retail point of sale systems, they're not close to seeing big dollar volume yet.