Rocket Stocks: Nike, Priceline, Bed Bath & Beyond

BALTIMORE (Stockpickr) -- Earnings season officially kicks off today, giving investors a benchmark that will set the market tone for the new year. It all begins with Alcoa (AA), the Pittsburgh-based Aluminum manufacturing giant, which releases its fourth-quarter numbers after the close.

Earnings season is especially significant this year because of the broad-based rally we've seen in the major indexes in the last quarter. With another glimpse of companies' actual performance, investors will get another shot at tempering their gains with actual fundamentals. And this week, we'll do our best to pick out the best performance by turning to our Rocket Stocks list.

For the uninitiated, Rocket Stocks are our weekly list of companies with short-term gain catalysts and longer-term growth potential. In the last 86 weeks, our Rocket Stocks have beaten the S&P 500 by 78.15%.

Related: 4 S&P 500 Stocks Poised to Rebound

This week, we'll continue our trend of looking at stocks with rising analyst expectations. On Wall Street, expectations can mean everything -- and stocks with rising expectations often benefit from increased buying pressures from institutions and retail investors alike. To find them, I run a quantitative screen that seeks out stocks with a combination of analyst upgrades and positive earnings surprises.

Here's a look at this week's potential plays.

Nike

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One company that won't be posting up its earnings numbers this week is athletic apparel giant Nike ( NKE), which released its quarterly data in late December. Ultimately, the fact that Nike's earnings calendar is out of synch with earnings season is a good thing for us -- after all, even buying a fundamentally sound stock ahead of earnings adds significant event risk to your portfolio.

But strong earnings sentiment could still deliver strong performance in shares of Nike this week. Nike's been a frequent component of our Rocket Stocks list, thanks to a solid financial footing, rebounding apparel sales in the U.S., and increased presence abroad -- particularly in developing nations. Growing middle classes in China, India and Latin America are the lynchpin to the company's growth strategy right now. As consumers seek out attainable status symbols, Nike's brand equity is providing a perfect sales growth opportunity.

Domestically, incremental growth continues to come to Nike as a result of increased consumer spending. Though those numbers are somewhat tempered by risks that consumer spending could slow as a result of extended economic troubles, 2011 is already forecast to be a strong year for spending. That's why we're betting on shares this week.

Nike stock fans include Warren Buffett -- the stock comprises 0.6% of his total portfolio as of the most recent reporting period -- and Chase Coleman at Tiger Global Management, at 1.2% of the total portfolio. Nike increased its dividend payout by 14.8% in late November, and according to Jeanine Poggi, it's one of Sterne Agee's 12 top consumer stocks for 2011.

Priceline.com

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2010 was a stellar year for shareholders of Priceline.com ( PCLN) -- shares of the travel booking site rocketed more than 103% in the last 12 months. Much of that price increase came from breakneck growth in the company's burgeoning international travel business.

As a travel outlet in one of the most difficult travel markets in recent memory, Priceline was surprisingly well-situated. With outsized exposure to travel deal seekers in regions such as Europe and Asia, the company saw its profitability get boosted above competitors such as Expedia ( EXPE) that rely mainly on highly commoditized domestic travel revenues. At the same time, the company was acting as a bargain broker for underutilized hotels and airlines seeking to add customers at substantially reduced costs.

While the low barriers to entry for online travel are certainly a concern for investors right now, the massive brand awareness that Priceline has achieved through expensive advertising campaigns gives the firm a significant advantage over upstarts. And because this stock also doesn't report earnings this week, this is a pure sentiment-driven Rocket Stock play.

Priceline is one of the top holdings of Ken Heebner at Captial Growth Management, making up 3.6% of the total portfolio, and the CGM Focus Fund, at 5.9% of the portfolio. With a B+ buy rating, the stock is one of TheStreet Ratings' top-rated Internet catalog and retail stocks, and according to Robert Holmes, it was one of the 10 best S&P 500 stocks of the past decade. Recently, RealMoney'sTim Melvin flagged Priceline among mighty stocks that might tumble -- a group of market-leading stocks in 2010 whose runs could be ending.

Bed Bath & Beyond

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Big box housewares player Bed Bath & Beyond ( BBBY) has truly had an impressive run in the last few years considering the macroeconomic headwinds that were pointed against it. While competitors hemorrhaged sales throughout the recession, BBBY actually managed to post sales growth and add new stores to its geographic footprint. The stock looks poised to continue this trend in 2011.

Bed Bath & Beyond has found a considerable chunk of its success in taking business away from department store competitors, whose higher prices and smaller product selection have sent dollar-conscious consumers looking for better alternatives. Perhaps most commendable about BBBY's business is the firm's ability to remain debt-free while fuelling its store growth through actual generated cash. While competitors struggled to meet their debt obligations, that factor has helped ensure profitability in tough times for Bed Bath & Beyond.

With consumer confidence numbers set to be released to Wall Street later this week, a strong showing could do wonders for spending-driven stocks. The outlook could be even better this week for consistently profitable cream-of-the-crop retailers like Bed Bath & Beyond.

Best Buy holders include Lee Ainslee at Maverick Capital, John Hussman at Hussman Econometrics Advisors and Chris Davis at Davis Selected Advisers.

For more stocks that made this week's cut, including Polo Ralph Lauren (RL) and DISH Network (DISH), check out the Rocket Stocks portfolio at Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.

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At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.

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