Top Rocket Stocks: Ensco

Ensco International and Echelon have the potential to move higher in coming days.
By James Altucher ,

For my weekly Rocket Stocks portfolio, I like to find beaten-up stocks that may snap back in the coming days based on specific catalysts ahead.

I am constantly checking lists of 52-week lows and analyst downgrades, hoping to spot out an oversold gem from which readers and fellow investors can profit.

As I have pointed out before, picking stocks ahead of catalysts is the best way to profit for near-term trades. These picks are not necessarily ideal long-term stocks for your 401(k), but they can make great short-term momentum trades.

Before we take a look at this week's

Rocket Stocks

let's see how

last week's picks

performed.

  • LDK Solar (LDK) : Down 5% on the week.
  • Walter Industries (WLT) : Up 8% on the week.
  • Deere (DE) - Get Report: Down 8% on the week.
  • Teekay (TK) - Get Report: Up 9% on the week.
  • Imperial Sugar( IPSU): Down 3% on the week.
  • Canadian Solar (CSIQ) - Get Report: Up 30% on the week.
  • Hewlett-Packard (HPQ) - Get Report: Down 4% on the week.
  • Noah Education (NED) : Up 9% on the week.
  • Shaw Group( SGR): Up 10% on the week.
  • UltraShort Oil & Gas ProShares (DUG) - Get Report: Down 2% on the week.

Now let's take a look at the

Rocket Stocks for the Week of May 19-May 23

.

First up this week is

Echelon

(ELON)

, a maker of remote utility and appliance management systems that help corporations use various energy systems better.

Echelon, which is set to report earnings today, could move higher based on a number of short-term factors. For starters, shares of Echelon have been in a wicked spiral since last summer, down about 80% from their highs above $30.

The company also has a massive short position of 21%, or about 6 million shares, which could create 18 days of pure buy-side pressure. On any piece of positive news, we could get a massive short-squeeze rally.

Another huge plus is that last week Echelon management effectively said, "The heck with Wall Street -- our stock is too cheap!" and announced a 3 million share buyback. This company obviously believes that the stock is undervalued and that it can build EPS through this buyback.

With basically every company wanting to "go green," Echelon, which has $110 million in cash and zero debt, could move higher.

Another stock worth looking at is

Ensco International

(ESV)

, which is a deep-water driller.

Shares of Ensco are incredibly cheap, trading with a trailing P/E of 9.5 and forward P/E of 8.2, a price-sales ratio of 4.4 and a PEG ratio of 0.43.

Ensco also has the highest margins of any of the deep-water drillers, 65%, compared with

Noble

(NE) - Get Report

at 59%,

Diamond Offshore

(DO) - Get Report

at 57%,

Transocean

(RIG) - Get Report

at 54%,

Pride

( PDE) at 43% and

Rowan

(RDC)

at 39%. In addition, Ensco has the youngest fleet adjusted for upgrades -- 5.5 years -- and the highest ratio of operating cash flow to capital expenditures in the industry.

Ensco has met or exceeded estimates for 33 quarters in a row and should now finally attract investors looking for an extremely cheap way to play deep-water.

Also worth keeping an eye on is

China Sunergy

(CSUN)

. This Chinese solar stock is set to report earnings this week and could really fly high.

Other stocks making this week's

Rocket Stocks portfolio

include

Goldman Sachs

(GS) - Get Report

,

Tesoro

(TSO)

and

Anadarko Petroleum

(APC) - Get Report

.

To find snapbacks and potential breakouts on a regular basis, check out these Stockpickr portfolios, which I use in my own research each week:

  • Always check the Biggest Percentage Losers, a list of stocks that lost big the day before, because they can snap back hard.When you check this list on Stockpickr, you can see which stocks are owned by the quality hedge funds and mutual funds. Pay attention to those. The funds will likely be buying at the lower prices and supporting the stock.
  • Ditto for the 52-week-low list. You must check the above two lists every day if you hope to find volatile stocks that can snap back.
  • Biotech Short Squeezes: Dendreon (DNDN) and others can often be found in this category.
  • Stocks Rising on Unusual Volume: These are potential breakout plays.
  • Stockpickr's System Trades of the Day: These are trades triggering that day in various back-tested trading systems we've developed.
  • Stocks With Unusual Options Activity: Perhaps someone knows something?
  • Latest Activist Situations: These are stocks that hedge funds are accumulating shares of and demanding change in. Believe me, these hedge funds piggyback each other. And once they start rocking the boat, things happen quickly. This should be on the must-view list.

One final place to frequent is the

Answers

section on Stockpickr, where ideas such as those presented in this article are thrown around daily. And you can further discuss your ideas and share opinions in Stockpickr's

Member Forums

section.

At the time of publication, Altucher and/or his fund had no positions in stocks mentioned, although positions can change at any time.

James Altucher is president of

Stockpickr

LLC, a wholly owned subsidiary of TheStreet.com and part of its network of Web properties, and a managing partner at Formula Capital, an alternative asset management firm that runs a fund of hedge funds. He is also a weekly columnist for the

Financial Times

and the author of

Trade Like a Hedge Fund

,

Trade Like Warren Buffett

and

SuperCa$h

. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback;

click here

to send him an email.

TheStreet.com has a revenue-sharing relationship with Trader's Library under which it receives a portion of the revenue from purchases by customers directed there from TheStreet.com.

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