Believe Buffett? Consider These Funds

In normal times, Bacarella grabs skyrocketing shares. These days, not many stocks are climbing, so he has had to modify his approach. To spot the best choices, Bacarella looks for stocks that rise the most on days when the market climbs. A favorite holding is Potash Corp. of Saskatchewan(POT Quote), which makes fertilizer. The company's earnings are growing as farmers around the world increase production. "The earnings are exceeding expectations, and the growth should continue," says Bacarella.

Another veteran momentum player is American Century Vista(TWCVX Quote), which returned 10.3% annually during the past decade, outdoing the S&P 500 by 7 percentage points. Portfolio manager Glenn Fogle seeks out companies whose earnings and share prices are improving. The fund will buy stocks losing money as long as prospects are getting better. "We are often attracted to stocks where the earnings are declining, but they are falling less than they were," Fogle says.

Recently, Fogle has been buying airline stocks, including Delta Air Lines(DAL Quote) and Continental Airlines(CAL Quote). Those were pounded last summer as rising fuel prices hurt earnings. In response, the airlines eliminated flights and instituted fees for luggage handling. When fuel prices dropped, airline margins improved. Though the airlines were still losing money, the shares began to rise. "The airlines are not good businesses, but their prospects are improving," says Fogle.

While some of his holdings are troubled companies, Fogle mainly holds stocks of companies with growing earnings. Lately he has been buying discount retailers, such as Family Dollar Stores(FDO Quote). With consumers seeking ways to save, the discounters have been reporting growing earnings. That has sent the shares climbing in a way that can attract the attention of momentum investors.