Each week I like to find beaten-up stocks that I believe have the potential to snap back in coming days because of specific catalysts that could play out. I especially like when these stocks with near-term growth potential also qualify as solid long-term plays.

Last week, for instance, I recommended

NYSE Euronext


as a

snapback play

. The stock has had every hater attacking it during its recent selloff. But after last week's upgrades, the stock began to fly despite a glitch on Thursday.

NYSE ended a bit higher on the week. Because I believe the stock will be the dominant global financial exchange 20 years out, I felt comfortable liking it for not only the short term but the long term.

As I do each week, I've compiled a list on Stockpickr of the top 10 rocket stocks for this week. The portfolio,

Contest Stocks VIII

, is a list of names that have the potential to move up big in the coming days.

To compile the list, I used several Stockpickr portfolios in my research:

First off, I like


( NOVL). In fact, I love Novell. It is an ugly, boring software company that has never really succeeded despite being in the tech industry for the past 20 years.

Eric Schmidt, the CEO of the best company ever --


(GOOG) - Get Alphabet Inc. Class C Report

-- used to be CEO of Novell and still couldn't do anything with it. It's that ugly.

That said, Novell dominates the Linux space, and more and more tech appliances are turning to Linux as the operating system of choice. A tech "appliance" is a computer that doesn't need all of the fancy stuff (word processors, video) but is used primarily for one purpose -- such as a storage device or a router. You don't need Windows XP to run a router. You just need a stripped-down, open-source operating system like Linux.

But here's why I love Novell. It's


going to go out of business. Ever. It doesn't matter how slow it grows, or even if earnings decline. It has $1.2 billion net cash sitting in the bank.

Is that cash being depleted? No. It generated $400 million in cash flow last year, and it has a market cap of only $2.63 billion.

Not only is the company never going anywhere, it's cheap. And to help us out on our search for catalysts this week, it's slated to report earnings on May 30.

A couple of portfolios support the bullish case for Novell:

  • Jim Cramer's Dream Portfolio: Cramer has recommended the stock, calling it a solid tech play.
  • Jacob Internet Fund, which counts Novell as a holding. Ryan Jacob flamed out in the '90s by going into all of the tech highflyers. But everyone deserves a second chance, and Jacob has more than redeemed himself. He's turned into the ultimate value-oriented Internet investor and has racked up a solid annualized 31.3% return over the past five years. He's in Sohu.com (SOHU) - Get Sohu.com Limited Sponsored ADR Report and Google, among others, placing Novell in good company within his portfolio.

One of my favorite Stockpickr members, "Mock Portfolio," has put together

Economic Indicator -- Rate Cut/Soft Landing

, a portfolio of stocks he believes will do well in a "rate cut/soft landing" environment, a scenario he predicts will play out. When he's not working on Stockpickr portfolios, "Mock" will be working this summer for a top fixed-income manager.

And finally, with earnings coming up on Wednesday, it's worth noting that Novell makes our list of the

Top 20 Most Volatile Stocks

, a list of stocks that historically make big moves when they report earnings.

Next up is


( CHINA), which makes online gaming and business software. It sold off all last week when a poor earnings report from


TheStreet Recommends


sent all online China stocks into a free fall.

Take a look at the five-day chart for CHINA as of Friday morning:


This action puts the stock solidly on our

3x2 system

trading list, a simple long-only system that buys Nasdaq 100 stocks after a down streak and sells them after an up streak. CHINA has historically been one of the most successful stocks in this system.

CHINA has triggered the 3x2 system 29 times since Jan 1, 2006, and has had 24 successes with an average return of 6.25% per trade. To see who is on the 3x2 system each day, check out our

System Trades of the Day


The 3x2 system in general has done very well historically across all


stocks. Here's a graphical representation of the annual returns over the past 10 years of this system:

3x2 System Performance
Returns over the past 10 years*

*as of January 2007
Source: Stockpickr

Interestingly, CHINA showed up a few weeks ago on the portfolio tracking

Gene Marcial's Inside Wall Street Stock Picks




This week's list of top 10 potential breakout stocks also includes a solid online ad pick. The

Online Advertising Index

successfully called the acquisitions of

24/7 Real Media

( TFSM) and


( AQNT), and I believe there are still names that could follow suit.

For all of the top 10 rocket stocks for this week, check out the

Contest Stocks VIII

portfolio on Stockpickr.

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

James Altucher is president of Stockpickr LLC, a wholly owned subsidiary of TheStreet.com and part of its network of Web properties, and 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;

click here

to send him an email.

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