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Since the start of the's"Beat the Street" game, I've been putting together a weekly list of the 10 stocks that have the potential to move higher in the coming week.

As I mentioned in my Stockpickr column a week ago, the stocks best suited for such a stock-picking contest are those that could

rocket in the short term

. But is it possible to get the best of both worlds with stocks that have both short-term growth potential, making them ideal for a stock-picking contest, and strong fundamentals, making them solid picks for the long term?

In the very short term -- and by that I mean one day, one week -- the kind of stocks that move fast and furious are stocks that have been beaten down. As an example, testing on the

Nasdaq 100

, a stock that drops 10% in a day will on average be higher 2% one week later. Conversely, if a stock is up 10% in a day, it's usually down one week later.

So for the short term, beaten-down stocks -- and they're usually beaten down for a good reason -- are the way to go. I believe we can get the best of both worlds if we find beaten-down stocks that also have good fundamental characteristics for the long term.

I've used Stockpickr to create another portfolio of stocks that have the potential to move higher this week, but this list,

Contest Stocks IV

, consists of stocks that I believe could do well this week for various reasons I describe below and that also have good fundamentals for the long term.

I relied on several Stockpickr portfolios to help me put this list together:

Altogether, I've identified 10 "rocket stocks" for this week and compiled them in the

Contest Stocks IV


Let's first take a look at

United Online


, which reports earnings on May 1.

The company is the result of the merger between two old-school dial-up online services companies, NetZero and Juno. Every quarter the number of customers using dial-up Internet services declines, and that's a shame for United Online because the margins on those customers are enormous and United is a cash machine.

The company has been in the penalty box for what seems like years because of its declining customer base. But Wall Street has been completely ignoring the fact that one of the largest social online networks,, is owned by United Online.

The company trades at just five times cash flows and has $162 million of cash in the bank. Given that profile, it's no wonder that the best hedge fund in the world,

Renaissance Technologies

, owns United Online shares. United also has a solid dividend yield of 6%.

I believe United Online will get revalued as a media company before long and, when it does, will begin trading at 10 times cash flows instead of five times. I believe that this revaluation could take place with this earnings report. Why? I suspect that paying customers from the content group will exceed paying customers from the dial-up side starting with this report. For specifics on the customer base, check out the United Online profile within the portfolio.

Next up, I like



, a small-cap name in the identity-protection/identity-fraud space. It conducts background checks, checks credit reports, analyzes credit scores and performs identity-theft recovery for both consumers and large financial institutions.

Intersections reports earnings after the close on April 30. Among the company's list of positives are two standouts. First is the insider buying. An officer of the company, John Scanlon, bought 10,000 shares in March at $9.97, which is right around where the stock's trading now. It closed Friday at $9.98.

Second, two of my favorite value funds --

Royce Value Fund


Heartland Value Fund

-- own shares of Intersections.

Heartland's results have been phenomenal, identifying value stocks that even have done well in the bear market years. Here are its returns since 2000:

  • 2000: +2.0
  • 2001: +29.5
  • 2002: -11.5
  • 2003: +70.2
  • 2004: +9.1
  • 2005: +2.0
  • 2006: +28.0

I always look to Heartland or Royce for investment opportunities to piggyback. Here's what Intersections has going for it:

  • Renaissance Technologies has been accumulating shares.
  • The stock is in the penalty box because the company missed last quarter when it delivered earnings of 4 cents a share, 10 cents shy of what analysts were seeking. Analysts have sharply lowered their estimates, so I believe it will be easier for the company to deliver an earnings beat this quarter.
  • It has a forward price-to-earnings of 12.
  • It trades for six times cash flows.

Other stocks making the cut in this portfolio are

Avid Technology

(AVID) - Get Free Report


Cognizant Tech

(CTSH) - Get Free Report

Whole Foods Market

( WFMI). To see the remaining five stocks that look interesting for this week, check out the

Contest Stocks IV

portfolio on Stockpickr.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider Intersections to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

At the time of publication, Altucher and/or his fund had no positions in stocks mentioend, although positions may change at any time.

James Altucher is a managing partner at Formula Capital, an alternative asset management firm that runs several quantitative-based hedge funds as well as a fund of hedge funds. He is also the author of

Trade Like a Hedge Fund


Trade Like Warren Buffett

. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback;

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