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5 Rocket Stocks You Should Buy as Stocks Bounce


VMWare (VMW) is the league leader in computer virtualization, the software that enables a single physical computer into multiple virtual machines. The real-world uses of the firm's technology range from making data centers more cost efficient to operate to enabling employees remote access to their work PCs. Virtualization is big business because it's complex and it's hugely cost effective -- it makes far more financial sense for a data center to license VMW's software than it does to buy additional high-cost servers and rent more space to install them. The rising tide of data in the cloud bodes well for VMW in 2013.

The datacenter infrastructure business has largely been VMware's bread and butter since the firm's founding, but desktop solutions have become an attractive (if competitive) market for the firm. A robust customer Rolodex gives VMW plenty of corporate doors to knock on for the desktop business, and much like the credit card business, it's likely that a rising tide in virtualization will lift all ships in the near-term.

The victories that VMW earns right now are going to matter a lot down the line. That's because datacenters have huge switching costs if they decide to go with a different virtualization vendor, so customers aren't likely to jump ship unless they've got a good reason. International sales should continue to be a big growth opportunity for VMWare over the next few years.


Food manufacturer Kellogg (K) is more than just its portfolio of breakfast cereals -- the firm also owns convenience food brands such as Keebler, Pringles and Morningstar Farms. That product diversification offers Kellogg some distinct advantages, particularly because it enables firm to avoid concentrating risk in a single product line but it still lets the firm consolidate its distribution efforts to cut costs.

Like most food manufacturers, the biggest headwind for Kellogg in recent years has been input cost inflation. As agricultural commodities like corn and wheat uptick in price, K has to make the difficult decision of eating costs and ceding net margins or hiking prices and potentially ceding its market share. While margins haven't been as robust in recent years as a result, Kellogg has been doing a decent job of managing those risks.

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