5 Rocket Stocks to Buy in March: Priceline, Apple and More

These stocks have both short-term gain catalysts and longer-term growth potential.
By Jonas Elmerraji ,

BALTIMORE (Stockpickr) -- It's a new month, so get ready for a new market in March.

So far, 2015 is shaping up a lot like 2014 did. January kicked off with a pretty sharp correction, but February gained it all back -- and then some. If March follows the pattern, we're in store for a moderate gain in the next four weeks; the big S&P 500 index gained about 150 basis points this time last year.

And while those aren't exactly gains to write home about, there are ways to magnify them. Post-2008, one of the most effective ways to boost your returns has been by focusing on the Rocket Stocks.

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 289 weeks, our weekly list of five plays has outperformed the S&P 500's record run by 80.93%.

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

Priceline Group

Up first is online travel company Priceline Group (PCLN) . Priceline has kicked off 2015 with solid performance, rallying more than 8.5% since the calendar flipped to January. that's about four-times the performance you'd have gotten by just buying the S&P 500. And Priceline isn't showing any signs of slowing down this month either.

Priceline Group operates a collection of online travel sites that collectively form the world's largest online travel agency. The firm offers bookings for hotels, airline tickets, car rental, cruises and other vacation packages, earning profits through its transaction fees. Priceline's expansion beyond its namesake Web site and into more value-added content, like that found on its Kayak subsidiary, should help cement the firm's leadership position here at home.

Elsewhere, Priceline is experiencing a growth story. The firm's growth in markets like China and Latin America have fueled its share price rallying more than five-fold over the last five years. While travel has become increasingly commoditized here at home, it's that international growth that holds the biggest profitability opportunity in PCLN, a fact that's evident from the firm's nearly 25% net margins last quarter. We'll get our next peek at PCLN's performance during its May earnings call.

Apple

Apple (AAPL) - Get Report has been a regular on our Rocket Stocks list in recent weeks, and for good reason. Year-to-date, this titanic technology stock has rallied more than 16%, completely outpacing analysts' expectations; not many people on or off Wall Street thought that the world's largest company would see a double-digit rally in the first two months of 2015. It's not just price either: Apple's fundamental performance has been spectacular, with iPhone 6 sales breaking records.

A big part of Apple's success comes from its tight integration. Unlike rivals, the firm controls both the hardware and software for its devices, tying products together in an ecosystem that includes its app stores and iTunes media store. That hardware and software integration also means that Apple is able to compete on performance without needing to compete on specs. Instead, it's able to optimize its code to wring more horsepower out of lower-cost components. That's a real advantage, and it's no trivial part of why Apple alone collects most of the mobile device industry's profits.

The chance of a government decision of offshore cash is likely to resolve a longstanding valuation question at Apple: "What's that $141 billion in net cash and investments really worth to investors." Tax implications aside, we're talking about nearly 20% of the firm's market capitalization covered by cash in the bank. While AAPL isn't dirt-cheap anymore, it's also pretty far form expensive -- and momentum is clearly on the side of buyers as we head into March.

Delphi Automotive

The automotive sector has been benefitting from record low interest rates and an older-than-ever average vehicle fleet, an environment that's basically purpose-built to move new cars. While most retail investors have focused on automakers, $23 billion auto parts supplier Delphi Automotive (DLPH) - Get Report has been in rally-mode, up more than 18% in the last 12 months alone. Even with shares at new all-time highs, DLPH looks primed for more outperformance. Here's why.

Delphi is one of the largest auto parts suppliers in the world. So, even if you've never seen the Delphi name stamped on a component, there's a very good chance you've come in contact with its offerings: The firm supplies automakers with everything from electrical components and safety parts to powertrain systems. Delphi enjoys a strong economic moat. Because the firm's OEM customers must deeply integrate Delphi's products into their own car designs, switching costs are very high for customers like GM or Toyota.

As the auto industry goes, so goes Delphi. The firm's emergence from bankruptcy in late 2009 gave it dramatically better positioning than it had in the prior years, but management needs to remain proactive to keep that profitability flowing. DLPH's deep moat of intellectual property and its worldwide manufacturing infrastructure give it an important edge supplying automotive companies. As long as this environment persists, so should DLPH's rally.

Invesco

It's not just car sales that are benefitting from the current economic conditions. A rising tide in the stock market has been fueling gains at investment management firms too, boosting profits as the multi-year rally in stocks grows their asset bases. Case in point: Invesco (IVZ) - Get Report.

Invesco provides investment management under its own name as well as the PowerShares, Trimark , Perpetual, and W.L. Ross brands. All together, those units combine to create nearly $787 billion in assets under management, nearly half of which come from stocks. That high proportion of equity funds comes with equally high management fees. Likewise, almost 70% of IVZ's funds belong to retail, rather than institutional, investors. That's another group that generates higher-than-average fees.

The firm's stock and fixed income businesses have posted strong performance in recent years, a key predictor of those funds ability to attract assets going forward. While competition is fierce in the ETF space right now, so is the opportunity to develop unique products that investors want exposure to. PowerShares' attraction to more specialty offerings should keep management fees high while insulating it from performance risks of actively-managed funds (instead, ETFs' abilities to track their underlying index are crucial).

IVZ is a good leveraged bet on continued asset outperformance in 2015.

Under Armour

Last up is Under Armour (UA) - Get Report, a performance apparel company that's managed to build a $16.5 billion business by going head-to-head with the big boys in one of the most competitive markets on the planet. No longer a niche brand, Under Armour boasts 125 company-owned stores and distribution in thousands of other retail locations. Expansion into new markets and new categories should continue to drive gains in 2015.

As an underdog in the hyper-saturated athletic apparel business, Under Armour was tactical with its marketing dollars, opting for sponsorship deals with up-and-coming athletes and university sports programs. Those guerrilla marketing efforts have paid off as UA's athletes' profiles increased. More recently, UA has made bigger-ticket bids for sponsorships, including the Olympics, and it's retained its reputation as a performance brand.

UA still has a lot of catching up to do abroad. Only around 10% of sales come from outside the U.S. That actually leaves a big opportunity for UA, particularly as the brand's profile grows outside the U.S.

With rising analyst sentiment in shares this week, we're betting on Under Armour.

-- Written by Jonas Elmerraji in Baltimore.

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At the time of publication, author was long AAPL. Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to TheStreet. Before that, he managed a portfolio of stocks for an investment advisory that returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation. Follow Jonas on Twitter @JonasElmerraji

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