The Top 10 Rocket Stocks for This Week

Altria and Broadcom could move higher in coming days.
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Last week I didn't get any hate mail regarding my picks for that week's Rocket Stocks portfolio.

For one, I didn't recommend

Dendreon

(DNDN)

, which ended the week flat in part because of a new probe by the

Securities and Exchange Commission

. If the biotech stock were to dip below $7 due to irrational behavior related to this investigation, I would definitely dip my feet back in and risk the wrath of FoDS (friends of the Dendreon shorts) again. For now, however, I'll steer clear.

This week's

Top 10 Rocket Stocks

portfolio focuses on stocks that I believe could run up into their earnings call or that, I believe, will provide some sort of upside surprise in their earnings report.

With just a few weeks left in

TheStreet.com's

Beat the Street 2.0

stock-picking contest, it's time to get serious about locking in gains and taking your portfolio over the finish line, or going for the kill if you are a bit behind.

First up is

PF Chang's China Bistro

(PFCB)

, a restaurant stock that's also featured in

Who Should Darden Buy

, a Stockpickr list of companies that would make sense for

Darden

(DRI) - Get Report

to acquire.

With PF Chang's trading for just eight times operating cash flows and solid growth prospects for both its Bistro and Pei Wei concepts, PF Chang's stock is very cheap, offering a reasonable takeover target. With 261 restaurants, PF Chang's is still in the early stages of a regional-to-national spread of its franchises. Add into the equation the early successes of its development-stage franchises, Pei Wei and Taneko, and everything is in place for a strong growth stock, but at value prices.

As mentioned, PF Chang's trades at eight times cash flows, which is cheaper than its comparables, particularly

Cheesecake Factory

(CAKE) - Get Report

at 12.7 times cash flows and Darden at 9.4 times cash flows. If you were to give PF Chang's a Cheesecake Factory multiple, its shares would be at $52. PF Chang's closed Friday at $36.58.

The company reports earnings July 25. It has met or beaten expectations for the past four quarters. With a short ratio of 15.2, it would take short-sellers 15 days to cover their short positions, assuming there's no other buyers in the stock. So on any good news, the stock could really climb.

To watch Gregg Greenberg's video take of this column, click here

.

Next up is

Broadcom

(BRCM)

, which reports earnings July 19.

The semiconductor company generated $3.67 billion in revenue in 2006, but Broadcom's story in 2007 all amounts to the iPhone. Broadcom supplies

Apple

(AAPL) - Get Report

with the I/O controller for the video interface to the touch screen. According to iSuppli and

Sramana Mitra

, this gets Broadcom about $1.15 per iPhone sold. Broadcom also recently won $19.6 million in damages related to its lawsuit related to infringing on some of its 2,000-plus patents.

Broadcom is kicking the competition. Apple CEO Steve Jobs doesn't award business lightly, and the touch screen interface was a huge risk for Apple. It's a risk that appears to be paying off for Apple and is likely to guarantee future business for Broadcom, not just with Apple but any other device-maker that wants to upgrade their game to compete against Apple. The win of the patent lawsuit should also help Broadcom secure future business.

With earnings coming up on Thursday and Broadcom driven by a score to settle -- first-quarter earnings went fell to $61 million from $117 million in first-quarter 2006 -- I wouldn't be surprised to hear a stock-buyback program announced. The company has $2.5 billion in cash and no debt.

For other companies that supply parts for the iPhone, check out the

iPhone Components

portfolio on Stockpickr.

Next we have tobacco company

Altria

(MO) - Get Report

, which is set to report earnings on July 18.

A recent study found that, on average, Chinese people smoke three times as much as Americans; it also said that it's common for Chinese people to smoke as much as three to four, or even five, packs of cigarettes a day. With Altria reporting numbers Wednesday, it seems as though the company's international exposure is likely to help it beat estimates once again.

Major holders of Altria stock are Capital Research and Management, State Street and Barclays. Altria is also a good long-term hold; it offers investors great international exposure (which is why it is a rocket stock this week), while offering a good dividend of 3.6% (a reason it's nice to have for the long haul).

For the rest of the 10 stocks that I believe have the potential to move up big in coming days, check out the

Rocket Stocks for the Week

portfolio on Stockpickr.

To find the snapbacks and potential breakouts on a regular basis, check out these Stockpickr portfolios, which I use iin my own research:

  • Today's Hot List: This daily list is a must-view at midday each day to see what stocks are making the biggest moves and why.
  • Always check the Biggest % Losers, a list of stocks that lost big the day before, because they can snap back hard. When you check this list on Stockpickr, you can see which stocks are owned by the quality hedge funds and mutual funds. Pay attention to those. They will be buying at the lower prices, so you should be also.
  • Biotech Short Squeezes. Dendreon and others can often be found in this category.
  • Top Insider Purchases and Buybacks.
  • 52-Week Lows List: As with the list above, you must check this portfolio every day if you hope to find volatile stocks.
  • Stocks Rising on Unusual Volume: These are stocks with the potential to break out.
  • System Trades of the Day: These are trades triggering that day in various backtested trading systems we've developed at Stockpickr.
  • Stocks With Unusual Options Activity: Unusual activity in these stocks the day before suggests that someone perhaps knows something.
  • Latest Activist Situations: These are beaten-down stocks that hedge funds are accumulating shares of and demanding change for. Believe me, these hedge funds piggyback each other. And once they start rocking the boat, things happen quickly. This should be on the must-view list.

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 a fund of hedge funds. He is also a weekly columnist for

The Financial Times

and the author of

Trade Like a Hedge Fund

,

Trade Like Warren Buffett

and

SuperCa$h

. 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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