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TheStreet Open House

Top Rocket Stocks: Colfax

Updated from 7:01 a.m.

Trading stocks can be a cruel and unpleasant process, especially in the short term. Stocks go though all sorts of growing pains all the time: There are missed earnings, misunderstood press releases, negative management meetings and all other sorts of company nonsense.

But sometimes the stocks that drop the most snap back the hardest.

And that's what we look for in developing each week's Rocket Stocks portfolio.

Despite last week's nasty selloff, the Rocket Stock portfolio for June 9 to June 13 was up nearly 1% vs. a decline in the Dow Jones Industrials of roughly 3%.

There are a lot of interesting opportunities in this week's portfolio, but let's review the individual picks from last week first.

  • China Medical (CMED): Up 17.7% on the week after posting quarterly earnings of 53 cents per share in the fourth quarter, as revenue almost doubled to $40.5 million on strong sales in its diagnostics business.
  • Krispy Kreme Doughnuts (KKD): Up 24.2% on the week with first-quarter earnings of $4.0 million, or 6 cents a share, which was much better than what the Street was looking for.
  • CMGI (CMGI): Down 23.5% after announcing a third-quarter loss of $2.6 million, or 5 cents per share. That coupled with lowered guidance going forward really hurt the stock.
  • Nova Biosource Fuels (NBF): Down 10.6% for the week, although the company did get an interesting upgrade from Ardour Capital.
  • Pep Boys Manny Moe & Jack (PBY): Up 17.4% on the week, after earnings of $4.7 million, or 9 cents per share, for the 13 weeks that ended May 3. That compared with earnings of $3.2 million, or 6 cents per share, in the year-earlier period at the automobile accessories and services company. The average estimate of analysts polled by Thomson Financial was a loss of 3 cents per share.
  • Casey's General Stores (CASY): Up 13.9% after the discount general store posted earnings that topped the Street's view.
  • Piedmont Natural Gas (PNY): Down 3% on the week, after net income fell by 5%.
  • Capstone Turbine (CPST): Flat on the week.
  • EnerSys (ENS): Up 12.5% on the week after increasing its outlook and posting super-solid earnings.
  • Stec (STEC): Down 8.6% on the week.

First up in this week's Rocket Stock portfolio is Colfax (CFX), which reports earnings on Tuesday and could move substantially higher.

Colfax, which is one of the few pure plays in the fluid management business, just came public last month and is firing on all cylinders.

With huge amounts of capital being spent to extract oil, rigs are under substantial pressure to drill as much as they possible can in order to take advantage of the inflated price. This is where Colfax comes into play.

Colfax's revenue is broken up in the following regions: 47% Europe, 24% U.S., 16% Asia, 7% Middle East and Africa, 3% Central and South America and 2% Canada. International sales now account for over 75% of the company's revenue, meaning that Colfax is not tied to the slowing U.S. economy.

Newpark Resources (NR), Robbins & Myers (RBN), Gardner Denver (GDI), Circor International (CIR) and Flowserve (FLS), all of which are involved in the fluid management business, are making 52-week highs almost daily. This vote of confidence from investors in the sector should prove to be a huge positive for Colfax going forward.

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