Summer doldrums? What summer doldrums?
U.S. markets are holding onto high ground as we push into the summer months. The big S&P 500 index is a mere 0.2% shy of all-time highs hit intraday on Friday. Since the financial crisis of 2008, only two other years have brought on new all-time highs for the S&P 500 in the month of May: 2013 and 2014. In both of those years, the remaining months of the calendar year have handed investors double-digit returns on a total returns basis.
In 2017, it makes sense to figure out which stocks look best-positioned to outperform in that sort of environment. To do that, we're turning to a fresh set of "Rocket Stocks" worth buying this week.
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 401 weeks, our weekly list of plays has outperformed the S&P 500's record-breaking run by 79.47%.
Meanwhile, Jim Cramer talks about oversold retail stocks on Real Money. Get his insights or analysis with a free trial subscription to Real Money.
So, without further ado, here's a look at this week's Rocket Stocks.
Being number-two isn't so bad. Just ask MasterCard (MA) .
It is the second-largest payment network in the world, with more than 1.6 billion cards in circulation and acceptance at approximately 40 million merchants around the world. So while MasterCard still lacks the scale of larger rival Visa (V) , it does have the scale to create a positive feedback loop for its business.
In other words, consumers carry MasterCard-branded cards because of high acceptance rates at stores, and stores accept the cards because so many customers carry them.
Critically, MasterCard is a payment network only. It doesn't actually issue credit or carry any of the other balance sheet risks of a lender. Instead, the firm is more technology company than financial firm -- and it collects a fee in exchange for facilitating millions of transactions per day.
MasterCard also has some strong growth avenues as more consumers push their purchases away from cash and onto electronic networks. MasterCard's network capacity is able to handle 140 million transactions per hour, giving it ample room to continue to grow without the need for onerous additional costs. Buyers are clearly in control of shares in 2017 -- now, it makes sense to join them this summer.
Best Buy Co. Inc.
Best Buy Co. Inc. (BBY) is back from the dead. In fact, shareholders are enjoying a stellar year in 2017. Since the calendar flipped to January, this $18 billion consumer electronics retailer has charged 39% higher, leaving the rest of the broad market in its dust. And that momentum isn't showing any signs of slowing as we head into the summer months.
It wasn't that long ago that investors wouldn't touch shares of Best Buy with a 10-foot pole. But what they didn't realize then is that the same exact things that scared Wall Street the most about this stock (its 1,575 brick-and-mortar retail stores), are turning into its biggest competitive advantage now.
Best Buy already has a massive footprint in place. And the firm is finally taking advantage of that asset by adding new distribution features like ship-from-store fulfillment from its Web site. That's helped it to out-grow the likes of Amazon (AMZN) online in the last year. Expect Best Buy to continue its turnaround as the firm unleashes new features for online and in-store shoppers, while also dramatically cutting operational costs to compete with the most efficient firms in the retail business.
Rounding out our list of Rocket Stocks this week is enterprise software-as-a-service stock Salesforce.com Inc. (CRM) .
Salesforce's software enables more than 150,000 customers to run business applications that interact with their customer lists, doing everything from sending newsletters to tracking sales. The mission critical nature of that toolbox means that customers are willing to keep re-upping when the next subscription payment comes due.
Because CRM's software packages tend to be deeply integrated in customers' other systems, switching costs are extremely high. That's even more true thanks to the AppExchange application store, which enables third-party developers to create applications that make use of customers' data to provide additional, more customized insights.
Quantification of company data has become an increasingly important offering for both large and small businesses in recent years, and Salesforce provides a turnkey cloud-based solution that fills that need. With rising analyst sentiment in shares of CRM this week, we're betting on this stock.