5 New Strength Plays for August

These companies with rising analyst expectations, including Corning and Yum!, could surge higher in the coming days.
Author:
Publish date:

BALTIMORE (Stockpickr) -- Wall Street's habits of mixed messages continued last week, despite the market's seemingly bullish motives. The S&P 500 index rose 1.82% on the week for the first week of August, even though less-than-appealing jobs numbers exerted downward pressure later in the week. With investor anxiety growing over more economic events slated for later this week, companies announcing earnings will need to impress the Street in order to give the market some direction this month.

As usual though, we'll be turning toward the Rocket Stock plays to eek out performance in an otherwise sideways-churning market. For the uninitiated, Rocket Stocks are our weekly list of companies with short-term gain catalysts and longer-term growth potential. In the last 55 weeks, Rocket Stocks have outperformed the S&P 500 by 49.36%.

This week, we'll be focusing on companies with rising analyst expectations. Here's

this week's list

.

For quick-service food giant

Yum! Brands

(YUM) - Get Report

, strong competition isn't stifling double-digit sales growth.

This stock should continue to be a strong performer in 2010 despite the more than 21% run-up shares have already made this year. A continued push for growth overseas should remain the company's strongest attribute for investors.

The predecessor to Yum! Brands was created in the late 1990s as a spinoff of

PepsiCo's

(PEP) - Get Report

restaurant division. Today, Yum! is one of the biggest fast food companies in the world, with around 37,000 units worldwide. The company's brands include KFC, Pizza Hut, Taco Bell and A&W.

While Yum! has a significant restaurant presence in the U.S., it's the company's China operations that are truly compelling. The company was one of the first American restaurant chains in the People's Republic, and it shows. Today, China contributes double-digit growth, industry-leading margins and substantial cash flows to Yum! The company, in turn, passes more than 35% of income to shareholders in the form of dividends.

Right now, this fast food stock has an impressive outlook. Investors should act quickly to capitalize on that for the rest of 2010.

New York State-based glass producer

Corning

(GLW) - Get Report

has come a long way from the cookware business it dominated decades ago.

Today, Corning is focused on high-tech glass applications, from glass substrates used in LCD displays to impact-resistant glass used in cell phones, computers, and TVs.

While Corning is involved in a number of products, including solar cells and cable systems, LCD panels are the company's biggest contributor to its bottom line. But as the largest provider of glass panels for LCD screens, Corning has substantial exposure to consumer spending -- more so than most industrial product makers. That made a significant impact on the company's finances in 2008, when consumer spending ground to a halt. Now the question is how long investors will have to wait to see the growth rates Corning enjoyed several years ago.

New technologies could be Corning's key to faster-paced growth. While breakage has kept even high-quality glass out of many high-growth consumer electronics, that could change with Corning's Gorilla Glass. The damage-resistant glass variant is being used in everything from cellular phones (it's rumored to be the glass used in the iPhone 4) to in-the-field tablet PCs.

I suspect that Gorilla Glass has the potential to become another high-margin revenue driver once it starts being used in additional applications in 2011 and 2012.

Who Owns Corning? Mark Hillman John Hussman

Information technology and research firm

Gartner

(IT) - Get Report

is the sole pre-earnings play we're looking at this week.

The company, which provides research and advisory services to the IT industry, has suffered from the cutbacks in IT spending that companies have implemented in recent years. But that trend has been reversing in 2010 thanks to impressive acquisitions and widening margins.

That delayed recovery has come largely at the heels of substantial PC market growth in 2010 -- estimated to hit 22% by the end of the year. With companies investing in their IT infrastructure once more, Gartner should continue to be a big beneficiary. The company announces earnings on Aug. 10.

Who Owns Gartner? Ron Baron

For more stocks that made this week's cut, including

Union Pacific

(UNP) - Get Report

and

Dominion Resources

(D) - Get Report

, check out the

Rocket Stocks portfolio

at Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.

RELATED LINKS:

>>Dividend Stocks: Norfolk Southern, Maxim

>>Jim Cramer's Portfolio Roundup

>>Must-See Charts: Citi, Intel, Priceline

Follow Stockpickr on

Twitter

and become a fan on

Facebook.

Jonas Elmerraji is the editor and portfolio manager of the

Rhino Stock Report

, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including

Forbes

and

Investopedia

, and has been featured in

Investor's Business Daily

, in

Consumer's Digest

and on

MSNBC.com

.