BALTIMORE (Stockpickr) -- Stock futures looked strong this morning, a good sign following the relatively tepid market action that characterized the last trading week. Traders have been looking for signs of strength ever since the S&P 500 broke above 1230, a key level for stocks that hadn't been seen since September 2008. As a result, early signs of strength this week could be an indicator that we'll see a last-minute bull run to close out 2010.
You can bet that the smart money will be watching for the potential for an upward move as we approach year-end, particularly because of the "
" the phenomenon where stocks historically make gains in January. As changes in market awareness shift seasonality factors such as the January Effect, the potential for an end-of-December rally becomes even more enticing. We'll be watching closely this week.
Meanwhile, we were once again able to capture market-beating returns last week by betting on a new set of Rocket Stock plays. For the uninitiated, Rocket Stocks are our weekly list of companies with short-term gain catalysts and longer-term growth potential. This week, we'll continue our trend of looking at stocks with rising analyst expectations.
On Wall Street, expectations can mean everything -- and stocks with rising expectations often benefit from increased buying pressures from institutions and retail investors alike. To find them, I run a quantitative screen that seeks out stocks with a combination of analyst upgrades, professional buying, and positive earnings surprises.
Here's a look at
are getting a strong showing this week, thanks to quelled fears over the impact of a prolonged recessionary period. While retailers -- especially high-end retailers -- faced serious challenges in 2008, 2009 and 2010 have been boom times for this class of stocks. And that trend looks unlikely to reverse as we sit just days away from 2011.
One of the best performers this year has been
, the upscale home products company that operates a chain of namesake cookware stores, as well as leading retail brands such as Pottery Barn and West Elm, and a successful direct mail catalog. Shares of the company have gained more than 71% year-to-date on the heels of successive earnings results that creamed analyst expectations.
While consumer spending has remained relatively soft, particularly in areas like residential construction, consumers are opting to buy high-end housewares as a compromise. By marketing their wares to the aspirational segment of the middle class, Williams-Sonoma has managed to carve out a relatively resilient niche that's actually enjoyed market-beating growth in the last couple of years. We're betting on shares this week.
Dick's Sporting Goods
is the market-leading stock in the sporting goods business, with 425 stores, a strong e-tail business, and a growing number of complementary acquisitions. The sporting goods business has been attractive for the last decade, particularly as it's penetrated the mainstream, offering apparel and exercise products that appeal to more than just active sports enthusiasts. Couple that with the robust margins that athletic apparel enjoys, and you've got a company worth watching right now.
With nearly 10% of the sporting goods market, Dick's has the size advantage to accelerate its expansion in the next few years. I love the fact that the company has placed big bets on increasing its exposure in the lucrative golf business, acquiring Golf Galaxy in 2007 and expanding its own in-store golf offerings. And because of its focus on high-margin, high growth items, Dick's actually enjoys much better profitability than many similar-sized retail peers.
That cash-generating prowess has helped the company secure and pay down debt on a consistent basis, even as it expands its geographic footprint. While competition is mounting in the sporting goods business, Dick's offers advantages over mass market retailers by supplying experts who can help customers pick the best set of clubs, select the best hunting bow, or identify their ideal running shoe. As a result, the company should be relatively insulated from seeing its business eaten by all but the most direct competitors, most of whom don't offer a comparable number of locations.
Institutional investors in Dick's include
, for whom the stock makes up 2% of his total portfolio, and
, which increased its position in Dick's by 88.6% in the most recent reporting period. TheStreet Ratings rates the stock a buy, earning Dick's a place on its
The recent rally in commodities hasn't only helped miners and commercial farmers out in 2010. Heavy equipment manufacturers such as
have also been big beneficiaries of attractive market conditions this year. Although most equipment makers are sensitive to increases in the cost of the hard commodities that they use to build their machines, those price jumps are actually positive for Joy Global because they have historically lead to additional orders as customers try to ramp up their production capabilities in good markets.
Joy Global is one of the biggest players in the mining equipment business. While that means stiff competition from the likes of
, the nuanced nature of Joy's product offerings has helped make the company's products ubiquitous at mining sites around the world. That huge installed base has in kind contributed to sales numbers for parts, a division that contributes more than half of the company's revenue numbers.
We're betting on Joy Global to continue its success this year, as strong Wall Street sentiment buoys shares for us in the short-term.
Also betting on Joy Global is
. The stock is one of his top holdings, comprising 1.36% of his total portfolio.
For more stocks that made this week's cut, including
Royal Caribbean Cruses
Illinois Tool Works
, check out
-- Written by Jonas Elmerraji in Baltimore.
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At the time of publication, author had no positions in stocks mentioned. Jonas Elmerraji, based out of Baltimore, 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
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