Stocks are off to a strong start for August, as we round the halfway point for the month. Month-to-date, the big S&P 500 index is 0.74% higher than it started the month. That might not sound like a slam-dunk for stocks, but it extrapolates out to a 27.6% annualized return for the full year.

In other words, August has been a very good month indeed for stock market investors. Of course, you don't need to crunch the numbers to know that August has been a good month for stocks so far. The fact that the S&P is hitting new all-time highs is pretty good evidence of that. But either way you slice it, we're likely to see another week of strong performance for stocks.

To make the most of that momentum, we're turning to a fresh set of Rocket Stocks worth buying this week…

For the uninitiated, Rocket Stocks are our list of companies with short-term gain catalysts and longer-term growth potential. To find them, I run a weekly quantitative screen that seeks out stocks with a combination of analyst upgrades and positive earnings surprises to identify rising analyst expectations, a bullish signal for stocks in any market. After all, where analysts' expectations are increasing, institutional cash often follows. In the last 362 weeks, our weekly list of five plays has outperformed the S&P 500's record-breaking run by 78.1%.

Without further ado, here's a look at this week's Rocket Stocks.

Alibaba Group

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Leading things off is Alibaba Group(BABA) - Get Report . This $260 billion Chinese e-commerce giant hasn't been a stranger to our Rocket Stocks list in 2016, and its performance proves that's been warranted. Just last week, Alibaba ended Friday up 7%, boosted by better-than-expected earnings results for the fiscal first quarter. Now we're looking for that positive twist in price momentum to carry over to this week.

Alibaba is the biggest online commerce company in the world. The firm owns many of the most popular online marketplaces in China, including namesake Alibaba, Web marketplace Tmall, consumer-to-consumer sales site Taobao and daily deals site Juhuasuan. Alibaba also operates the Alipay payment network and a collection of smaller niche internet businesses. Being big comes with some important advantages for Alibaba; shoppers use Alibaba because of its vast selection of products, and merchants sell on Alibaba's sites because it's where the shoppers are. That creates a virtuous cycle that's resulted in around one in five Chinese consumers using the firm's marketplaces.

Last quarter's earnings numbers were extremely promising. Total revenue increased 59%, proving that Alibaba can still move the growth needle in spite of its huge size. Likewise, progress in newer segments such as its AliCloud suite of services looks promising in 2016. Buyers are clearly in control of Alibaba's price trajectory this week.


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2016 has been a rebound year for oil services company Schlumberger(SLB) - Get Report . This $114 billion energy company is up 18% on a total returns basis so far this year, leaving the rest of the S&P 500 in its dust year-to-date. And Schlumberger could have more where that came from, even as energy stocks correct over the summer months.

Schlumberger is the largest oil services provider in the world. The firm's revenues come from a menu of specialized field services such as seismic surveys and well drilling and positioning. In a nutshell, this company's mission is to pull oil out of the ground as efficiently as possible -- and as oil prices hang onto higher levels in 2016, Schlumberger's clients are finally feeling willing to invest in more projects again.

Oil firms turn to Schlumberger because the tasks they need to accomplish are too nuanced or proprietary to pull off in-house. And the firm's omnipresence on the oil patch translates into opportunities to cross-sell other complementary services to existing customers. The majority of the black clouds surrounding the energy sector were priced into SLB and its peers coming into 2016; that leaves the door open for upside stock moves from positive surprises and "less bad" performance in the second half of the year.

Schlumberger is a holding in Jim Cramer's Action Alerts PLUS charitable portfolio. Cramer and Research Director Jack Mohr wrote on Friday:

By continuously investing in innovation (its R&D budget is larger than the entire market cap of most of its peers), the company is able to develop best-in-class products that save costs for customers while often increasing oil recovery rates. As such, it is able to price its products and services higher and earn superior margins. Whenever it takes a seat at the negotiating table, it has the upper hand. Its bargaining power is unmistakable and is a testament to the company's vigilant management team that has worked to keep the company ahead of the curve. While we still believe that near-term sentiment is largely driven by oil price movements and the broader health of the energy sector, we are confident that SLB is a winner above its peers. 

General Dynamics

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General Dynamics(GD) - Get Report  is another big stock that's seeing a double-digit rally year in 2016. This $46 billion defense contractor is up 12% on a total returns basis since the calendar flipped to January -- and shares are hitting lifetime high price levels this summer. An increasingly complex global macro environment bodes well for demand at GD's defense and aviation units.

General Dynamics has a widely diversified defense business. The firm's products include everything from submarines to armored vehicles to computer systems. That wide net for defense spending dollars mean that GD is more or less protected from politics and the risks of cuts in any single segment. Outside of defense, the firm also owns Gulfstream, one of the largest manufacturers of private jets. That aerospace unit contributed around 30% of sales last year, and it's totally divorced from the threats and pressures that drive the defense side of the house.

One of the big risk reducers for GD is its backlog. At $51.7 billion, that huge amount of risk means that GD is basically able to take on work as quickly as it can get through it. At the same time, an increasing share of that backlog is coming from U.S. allies, spreading more of this stock's risks away from the Federal defense budget.

With rising analyst sentiment in shares of General Dynamics this week, we're betting on shares.

Quest Diagnostics

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Medical testing giant Quest Diagnostics(DGX) - Get Report  is one of the biggest providers of diagnostic testing services in the country, enjoying a virtual duopoly with main peer LabCorp(LH) - Get Report . As demographics shift in the U.S., and the average population gets older, that big positioning becomes more and more attractive -- a rising tide stands to lift all ships in the medical testing business. And Quest is particularly well-positioned to profit from that trend.

Quest more than 2,000 clinics spread from coast to coast. That means that if you've taken a blood test or a drug screening in the last few years, there's a pretty good chance it was at one of Quest's facilities.

Quest's main business is built on volume. The firm runs an immense number of simple, low-margin tests every day -- but management has been working on boosting margins by introducing more complex products such as genetic and pathological tests that are often proprietary and less commoditized. Features such as Quest's Web-based physician portal also help give the firm some semblance of an economic moat. For instance, doctors are more likely to send patients to a given testing center if test results and other patient data are presented in a way that makes analysis more convenient for healthcare providers.

Quest is yet another stock that's enjoying some bullish momentum in 2016. Shares are currently 20% higher than they started the year and within grabbing distance of fresh all-time highs.

Alaska Air Group

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Last up on our list of Rocket Stocks is $8 billion airline Alaska Air Group(ALK) - Get Report . Alaska Air is the seventh-largest air carrier in North America, a ranking that's set to rise when the pending acquisition of Virgin America (VA)  is completed. With Virgin's operations folded under the Alaska corporate umbrella, the combined airline becomes the fifth-largest airline in the U.S.

In the meantime, Alaska operates two distinct air carriers: Alaska Airlines and Horizon Air. Together they have a combined fleet of 142 Boeing 737 and 52 Bombardier Q400 aircraft. The firm's network serves more than 100 cities and connects Alaska with the lower 48 states and vacation destinations such as Hawaii and Mexico. A large number of longer-haul and government subsidized routes make Alaska Air one of the more attractive operators.

Long-term, the exact same macro factors that have been driving record profits for larger operators are also driving higher prices for Alaska Air. Rising demand for air travel, as well as a prolonged decline in jet fuel prices, have been a major tailwind that have propelled ALK's net profit margins higher. As long as the cyclical strength in the airline industry persists, Alaska Air is a great way to play this trend.

Disclosure: This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.