BALTIMORE ( Stockpickr) -- Unlikely as it may have seemed after last Monday's 1.8% tumble in the S&P 500, the biggest single-day drop of the year, Mr. Market actually managed to end the week higher (just barely). Friday's close put the big index just 3% away from 2007's record highs. And for investors, that persistence in rally attempts is a very good thing.

With the first full trading week in March kicking off this morning, we're going to get a quick answer to whether February's correction is drawing to a close now that a new month is on the calendar. To take full advantage, we're turning to a new set of Rocket Stock names this week.

>>5 Stocks Poised for Breakouts

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 189 weeks, our weekly list of five plays has outperformed the S&P 500 by 77.08%.

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

>>5 Huge Stocks You Need to Sell

Enterprise Products Partners

While a natural gas master limited partnership hasn't made our Rocket Stocks list in quite a while, that's changing this week with Enterprise Products Partners ( EPD). The $51 billion gas and oil transportation and processing firm has had a stellar run so far in 2013, climbing more than 13% since the start of the new year. Now EPD is looking to tack on even more performance as the broad market flirts with another leg of this rally.

Enterprise owns nearly 51,000 miles of pipeline spread across the country, with more than 14 billion cubic feet of natural gas storage capacity. That midstream exposure looks particularly lucrative right now, especially as sustained high oil prices have spurred some commercial substitutions to natgas over the last few years. Enterprise is asset-heavy for an MLP, giving it a balance sheet that's difficult to replicate within the legal obligations that peers have to maintain.

EPD's MLP status is significant because it makes the firm a dividend generation engine. EPD doesn't pay income tax on its earnings. Instead, it passes those earnings onto shareholders. As a result, EPD's dividend yield sits at 4.65% right now. Investors looking for income as well as capital gains in this market need to look no further than EPD.


Even as conventional retail stocks struggle this quarter, Macy's ( M) is showing investors some best-in-breed characteristics. The Cincinnati-based firm owns two of the best-known department store chains in the country, with more than 850 Macy's and Bloomingdale's locations spread across the U.S. While peers such as J.C. Penney ( JCP) have strapped on cement shoes ahead of earnings calls this month, Macy's is actually carving out material improvements in its business.

Most of the big changes to Macy's business came in the wake of the Great Recession, when the conventional retail model suddenly became a whole lot more difficult to execute on. Macy's has made significant strides toward improving its internal efficiency, improving its localized merchandising efforts and working on driving more traffic into its stores. And investors are seeing the payoff in the form of a return to profitability, incremental increases in same-store sales, and margin improvements that have put the firm's financials a cut above lately.

Macy's has been using a lot of that newfound financial performance to pay down debt and improve a balance sheet that's looked sketchy at times. Today, with $6.9 billion in debt and nearly $2 billion in cash, Macy's liquidity isn't a concern for investors. With rising analyst sentiment in shares right now, we're betting on this Rocket Stock.

Franklin Resources

In the last 12 months, the S&P 500 has climbed around 11%, which has significantly compounded the earnings potential at Franklin Resources ( BEN), the $30 billion asset management firm. Franklin manages more than $780 billion in stock, bond and hybrid funds targeted towards retail investors. As investors start to come around on buying equities again, Franklin stands to benefit in a big way.

As the fifth-biggest asset manager in the country, Franklin enjoys an attractive niche position in the market. Because it's an independent asset manager, it skirts the negative PR implications of big banks' investment arms but retains the scale to turn out deep margins in the double-digits. Advisors are a key part of BEN's customer strategy, and the firm's 130,000 advisors provide a direct way to attract assets across all of its investment styles. Most of BEN's assets are invested in fixed income right now, an asset class that generally earns smaller management fees than equities do - as investors warm up to the equity market, Franklin Resources should see its profitability warm up in kind.

A better-than-average customer retention rate is critical for BEN's continued growth. Because advisors build relationships with clients, they can provide level-headed guidance when retail investors get spooked. That avoids some of the problems of retail investors pulling out funds at the worst possible time for both themselves and for Franklin.

Dollar General

2013 is panning out to be a strong year for discount retailer Dollar General ( DG). Shares of the $15 billion firm have climbed close to 8% this year, edging out the S&P 500's performance over that same period of time. DG is the largest discount retailer in the U.S. with around 10,000 stores spread across 39 states. The firm has been a strong performer since it re-emerged as a publicly-traded name in 2009, but that strength doesn't look likely to fizzle out even as consumers become more willing to spend cash.

During the recession, Dollar General was one of the very few retailers that actually saw growth as lower-income consumers traded down from more conventional retail options. Much of that growth has proven sticky, as shoppers opt to stretch their dollars further (for the same items in many cases). In spite of DG's big store footprint, the firm still has considerable room for expansion in untapped states and through same-store-sales increases. Bigger use of private labels and the company's expanded payment options are two big catalysts to watch this year.

Management sees a store target that's around twice as big as the firm's current footprint. That's a massive growth opportunity for shareholders right now. With a balance sheet that's in reasonably good shape and substantial free cash generation abilities, DG should have no trouble paying for that growth...


Last up on this week's Rocket Stocks list is another retail name: Kohl's ( KSS).

Kohl's is a big box department store that operates more than 1,127 stores in the U.S. The firm's focus is value, offering middle-income consumers well-known brand names at moderate prices. Like Dollar General, it should be no surprise that Kohl's has enjoyed some serious success in the last few years as cost-conscious shoppers rewarded value retailers with meaningful growth. Kohl's has traditionally marched to the beat of its own drummer, eschewing conventional department stores' mall anchor store locations in favor of cheaper standalone locations.

Instead of courting deals from premium-priced brands, KSS has pursued exclusive celebrity and designed-backed labels for its stores, moves that have dramatically boosted KSS' margins and customer draw. Today, around half of Kohl's sales come from its own private label brands.

In 2013, Kohl's has managed to attract investors thanks to its strategy as well as its 3% dividend yield. With a balance sheet that's flush with cash and plenty of untapped room for new store locations in the U.S., this retail Rocket Stock name has more growth ahead of it. We're betting on shares this week.

To see all of this week's Rocket Stocks in action, 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, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to
TheStreet . Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily , and on Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

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