The Top 10 Rocket Stocks for This Week

Lam Research and Intuit may move up big in the week ahead.
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The market's 400-point drop last week has certainly created some bargain stocks, and many of them may be poised for a serious snapback. Here at Stockpickr we look at the fundamental and technical catalysts that have the potential to turn a stock into a rocket for your portfolio.

As I do each Monday, I've compiled the

Top 10 Rocket Stocks for This Week

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

This week certainly has stirred up some interesting names with some snapbacks, some breakouts --

Crocs

(CROX) - Get Report

, for instance, has been moving up on higher volume and I believe it will see $100 before long -- as well as some takeover rumors, some activist situations and some plays based on statistical modeling of the recent selloff in the market.

To generate ideas for this week's list, I used several Stockpickr portfolios in my research:

Let's look at a few of this week's potential rocket stocks. First up,

Lam Research

(LRCX) - Get Report

, a semiconductor stock that on Friday triggered a buy in our

System Trades of the Day

portfolio. Lam had been down several days in a row, along with most other stocks, because of the recent marketwide selloff.

Lam has just about every quality I like to see in a potential rocket stock. First off, it triggered the 3x2 System, which registers whenever a stock falls three days in a row. The idea behind this trading system is to buy the stock the next day and hold until it goes up two days in a row, before selling the next morning.

Lam has triggered the 3x2 System on 32 occasions since Jan. 1, 2006, and has had 27 successful trades under it -- a remarkable degree of success for an average return per trade of 3.5% over a four-day holding period on average.

Second, Lam has great fundamentals with $1.1 billion in cash and only $250 million in debt. It generated earnings before interest, taxes, depreciation and amortization (EBITDA) of $800 million on an enterprise value of only $6 billion. In other words, it has an enterprise-value-over-EBITDA multiple of just 7.5 times, compared with a competitor like

KLA-Tencor

(KLAC) - Get Report

, which trades at 10 times.

So why is Lam's stock down? Chalk it up to the general market selloff. For that reason, it's a perfect time to buy. I'd aim for a 3%-6% quick pop with the potential for a long-term hold.

Lam makes the list of

Best of the Magic Formula Stocks

. These are stocks that have high return on equity, low price-to-earnings ratios and rank high in the software program Vector Vest. Other stocks on this list include

Exxon Mobil

(XOM) - Get Report

and

Marathon Oil

(MRO) - Get Report

.

Next up is

Intuit

(INTU) - Get Report

, a business-software maker that provides another double play. It triggered the 3x2 System on Friday and also appeared on a recent list of

Top Insider Purchases and Buybacks

after it announced an $800 million share buyback program.

Intuit recently announced it generated $1 billion in quarterly sales for the first time, and it sports a P/E ratio of 19. It has a superb balance sheet with $1.3 billion in net cash and trades at just 11 times cash flows. Also, super hedge fund

Renaissance Technologies

is an investor, probably because of the enormous cash on the balance sheet, which seems to be a common feature among Renaissance's holdings.

For the rest of the stocks on this week's list -- including Crocs,

Microvision

(MVIS) - Get Report

and

Sears

(SHLD)

-- check out the

Top 10 Rocket Stocks for This Week

.

And, once again, to see the Stockpickr portfolios I used to research this week's list, check out:

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

and

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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to send him an email.

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