BALTIMORE (Stockpickr) -- U.S. stock futures were set for a rebound on Monday following a decision on the part of Europe's finance ministers to approve a 500 billion euro loan guarantee package that would apply to the PIIGS countries. With Eurozone anxiety being one of the main drivers of last week's financial hemorrhaging, could this week reverse the correction?
Last week was a significant one for the markets. With the S&P 500 down 6.39% in the last five trading days, the first week of May 2010 marked the worst week for stocks since October 2008. And while our Rocket Stock plays fared significantly better than the market -- 2.1% better, in fact -- we still saw our plays move lower. This week, we'll try to catapult our positions using the market's reversal.
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 42 weeks, our list of intraweek plays has outperformed the S&P 500 index by 50.66%.
Here's a look at
First up this week is
, the $64 billion diversified entertainment company that owns everything from film studios to theme parks. Despite a broad market that's been less than favorable in 2010, Disney has managed to keep its head above water this year, buoyed by good quarterly results, upgrades and M&A rumors. Earnings slated for Tuesday could be the catalyst this stock needs to make it to the next level this week.
While most companies would balk at being referred to as a "Mickey Mouse stock," Disney embraces its most famous character, who has proven to be a cash cow over the years for investors. But the real jewel in Disney's crown is its portfolio of media networks (including ESPN), which generate a substantial portion of its double-digit operating margins.
While entertainment is discretionary and thus more prone to recessionary headwinds than many other industries, Disney's widely diversified business model offers a good deal of protection from downside risk. Still, the company's exposure to the European market right now could play against it in the second half of 2010. In the short term, this play looks stronger -- so that's exactly the bet we're making this week.
Athletic apparel giant
is no stranger to our weekly Rocket Stocks list, and for good reason. The company has long delivered above average returns for investors hoping to take advantage of a highly profitable, innovative apparel brand. This week, we're turning to Nike once again following a wave of rising analyst expectations.
Since CEO Mark Parker took the company's helm back in 2006, he has held his co-workers up to ambitious sales goals that were echoed in last week's investor meeting. Much of the growth in Nike's top line has been made in the emerging markets, where Nike already has strong brand recognition but hasn't taken full advantage of its sales potential. For the next five years, retail expansion in the emerging market nations should continue to drive significant sales growth.
That's not to say that its U.S. sales channels will be anything less than impressive in the next couple of years. With Nike alone accounting for more than half of purchases for retailers such as
and with a growing brand presence at domestic factory-owned stores, expect improving consumer sales numbers to have a big impact on the company's financial performance.
With nearly 9% returns this year,
has been one of the Dow's best-performing components since the first trading days of 2010. Above average gains should be nothing new for investors in the fast food giant. While most indexes have essentially only managed to hold their values over the trailing 10 years, an investment in McDonald's a decade ago would be worth nearly twice as much today as it was on May 12, 2000.
This week, I'm betting that this stock can continue to return impressive gains for shareholders.
And I'm not alone. Analysts have been showing increasingly bullish sentiment on the stock, which could prompt many of their employers on Wall Street to increase their stakes McDonald's shares. Like Nike, a significant amount of the company's prospective growth remains overseas in emerging markets. New expansion initiatives are currently taking place to make the most of them.
Expect shares to get a bullish push ahead of next week's investor meeting.
For more stocks that made this week's cut, including
Cheniere Energy Partners
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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
, and has been featured in
Investor's Business Daily