BALTIMORE (Stockpickr) -- April's job numbers, due to be released on Friday, will be a key news event for the markets this week, as investors settle from the correction that left the S&P 500 index 2.51% lower last week. That poor performance was a stark contrast to the seemingly unbridled rally that stocks have been on since early February. In those three months, the S&P has climbed more than 11% -- the biggest run of gains that the market has seen in six years.
But mixed fundamentals have taken their toll on investors who are unsure of how to proceed in this market. Although bullish data on consumer spending and earnings numbers have buoyed the market lately, shadows cast by Greece's debt concerns and Goldman's SEC lawsuit have applied ample downward pressure.
Instead of focusing on the top-down approach that has Wall Street flustered, each Monday we turn to our list of Rocket Stocks to take advantage of microeconomic opportunities forming in individual stocks.
If you're not yet familiar, Rocket Stocks are our weekly list of beaten-down stocks with near-term growth catalysts and long-term fundamental growth potential. They certainly live up to their name -- in the past 41 weeks, our list of intraweek plays has outperformed the S&P 500 index by 48.56%.
Here's a look at
In the fallout from the credit crunch, private equity firms such as
have been avoided by many investors -- as much for the business implications of a slowed economy as for the opaque nature of the private equity world. But that's a completely different story today. Recovering economic numbers and bargain basement acquisition opportunities are giving private equity significant gain potential right now. And Blackstone's unique position could make it one of the best in breed stocks to own right now.
In the wake of 2008's bear market, Morningstar estimates that funds flowing to private equity funds has slipped more than 75% from 2007 and 2007 levels. That's a scary number for shareholders of Blackstone, one of the biggest private equity firms in the world -- and one of the few pure plays that's accessible to individual investors. Blackstone has a sizable advantage in its long track record of managing successful business investments; as investors look to take advantage of a skilled private equity team, this company will continue to be a smart choice.
Although the stock markets have rebounded significantly in the past 18 months, less-liquid privately held equity shares have been slower to regain value, a fact that investors such as Blackstone are able to take advantage of to grow their portfolios in 2010. The results of those moves could take a while to come to fruition, though. In the short term, count on rising analyst sentiment to push shares higher.
2010 has been good to
so far. Shares of the aerospace and defense firm are up 13.14% this year, compared with just over 4% for the broad market. With investors unsure of how to handle the market right now, the company's decent dividend yield and government-fueled sales growth could look pretty appealing to Main Street and Wall Street alike. The company's latest outlook is driving that fact home right now.
There are plenty of reasons to like Raytheon. With a largely diversified contract portfolio, the company is less reliant on any single project than many of its peers. Its low, manageable debt load is an attractive corporate attribute in declining economic conditions. And Raytheon's incredibly timely divestiture of its civil aircraft division in 2006 sliced substantial downside risk from this stock at the best possible time.
If the company can meet its impressive expectations for 2010, the stock should see returns in kind.
IPO'd a year ago, I've been a big fan of the company. After all, Rosetta Stone is a pioneer in the language software market, selling its self-titled product to consumer, corporate and government customers who need to learn to speak anything from Spanish to Swahili quickly and easily.
From a product perspective, the company has terrific IP in its portfolio, with an effective language training methodology that's used across all of the languages it offers, giving the company the ability to develop new language curriculums quickly and without huge capital investments. Rosetta Stone's relatively high product costs have helped the company maintain decent margins, while still undercutting costs on more traditional language learning options.
But while the company's product is alluring from a growth standpoint, its lack of an operational track record has kept the fundamental numbers tipped against it. Rosetta Stone announces is first-quarter 2010 earnings numbers on May 6; I'm betting that the company will quell a few investor doubts this week.
For more stocks that made this week's cut, including
, check out the
-- Written by Jonas Elmerraji in Baltimore.
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At the time of publication, author had no positions in stocks mentioned.
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.