BALTIMORE (Stockpickr) -- Stocks cratered last week, the big S&P 500 index dropping approximately 2.7% between Monday's open and Friday's close. For those keeping score, that's the worse single-week run for stocks in two years. And there could be more selling on the way.

By most accounts, the correction in the S&P 500 was well overdue. That big consensus on the need for a retracement in stocks is a concern – after all, the crowd is rarely correct en masse at key turning points. Likewise, the technical picture points to more selling as well before this correction calls it quits.

So, what better way to tackle the downside risk than with a new set of "Rocket Stocks"?

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 260 weeks, our weekly list of five plays has outperformed the S&P 500's record run by 79.61%.

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

Walt Disney

Entertainment giant Walt Disney (DIS - Get Report) is having a strong showing in 2014. While the S&P has delivered run of the mill 4.16% returns year-to-date, Disney shareholders are sitting on 11.75% gains. That's nearly triple the performance of the broad market. The gain multiplier is thanks in large part to a model that's continuing to deliver fundamental growth right now -- and investors should expect more of the same from this Rocket Stock in the second half of the year.

Disney's entertainment empire spans multiple formats, from film and television to theme parks and action figures. It's important to note that the firm's intellectual property portfolio includes a collection of some of the most beloved children's characters ever created, assets that Disney has adeptly leveraged throughout its business. But while Mickey Mouse gets the spotlight, the ESPN TV network is getting the glory now that football season is right around the corner. ESPN is the most valuable network in the world, capturing a bigger part of your cable bill than any other network out there, and the firm's humongous contract with the NFL is a key part of that success.

Meanwhile, theme parks are coming alive again thanks to a recovering economy. Because Disney is highly integrated, it's able to take popular characters from a film and move them into TV, theme parks and merchandise, multiplying the value of its efforts and trimming costs. The huge capital costs of running theme parks and cruise ships were a drag on earnings when they were underperforming, but they should make up for that drag on this side of the economic cycle. We'll get a closer glimpse at Disney's numbers when the firm releases its earnings after the bell tomorrow.

Disney shows up in Steven Cohen's SAC Capital portfolio as of the most recently reported quarter.


Snap-on (SNA - Get Report) is another name that's handily outperformed the S&P in 2014. Since January, shares of the tool and diagnostic equipment maker are up more than 9%. Snap-on's high quality tools are a staple in car shops -- but they're also found everywhere from industrial factories to airplane hangars. The firm generated just over half of its sales in the U.S. last year.

Snap-on's revenue machine is built around business-to-business sales. The firm's fleet of 3,200 vans touches customer shops on a weekly basis, securing sales and delivering orders directly. That's a hands-on model that few competitors can compete with. Likewise, Snap-on's spectacular reputation is paramount to its ability to sell premium tools. Because the firm manufactures approximately 70% of its tools in-house (half again as many as its peers produce themselves), it has better control over quality. SNA's reputation among professional shops also trickles down to the consumer and prosumer DIY markets, where it's able to generate sales without resorting to costly marketing efforts.

The aged U.S. automotive fleet is still a major growth driver for Snap-on. With the average age of cars on the road today older than ever before, shop capacity is ramping up, and so too are their tool needs. That organic growth should secure upside in Snap-on for the foreseeable future.

National Oilwell-Varco

Oil service provider National Oilwell Varco (NOV - Get Report) owns an important niche in the process of pulling energy out of the ground. The firm is the leader in tools, services, and consumables used to droll for oil and gas. With crude prices pressing up against the top of their historic range this summer, that's a good place to be.

Higher oil prices mean that more oilfields are economically viable, and that, in turn, means more work for NOV. Because the firm has expertise in helping oil companies pull commodities out of the ground, it’s got critical advantages over upstart rivals emerging overseas -- especially as the average age of oil projects lengthens and E&Ps look to get more life out of them.

The firm's decision to spin off its DistributionNow (DNOW) unit last month should unlock value for shareholders, at a cost of only 12% of sales. While the oil service business is capital-intense, NOV boasts an impressive balance sheet with a net cash position of nearly $800 million. Coupled with a P/E ratio in the low double-digits, and a 2.3% dividend yield, NOV looks like a bargain at current levels.

C.R. Bard

Medical device maker C.R. Bard (BCR) has been outperforming the broad market all year long. Since the calendar flipped to January, this $11 billion name has climbed close to 12% higher. And now, with rising analyst sentiment pouring into shares this week, we're betting on this Rocket name.

Bard is a major player in the market for one-time use devices. The firm's core business is in urology, oncology, and surgical tools, manufacturing everything from infection-control catheters to scalpels. Bard's 90% exposure to consumable products is extremely attractive. It means that revenues are generally recurring in scale with medical procedure volume, so as the population in the U.S. ages, Bard is sitting on the right side of a major trend.

From a financial standpoint, BCR is in good shape. The firm's balance sheet carries $1.6 billion in total debt, largely offset by a billion-dollar cash position. That leaves the firm with a very serviceable net debt load. While product liability claims for its vaginal mesh products have been a near-term setback, large claim reserves should mean that those black clouds are largely behind it.


Finally, with markets looking corrective this week, snack and beverage giant PepsiCo (PEP - Get Report) is a good defensive Rocket Stock name to hang on to. For investors who aren't intimately familiar with Pepsi's operations, it's easy to forget that this stock isn't solely a beverage maker – snack foods make up an equal part of sales thanks to the sprawling Frito-Lay division. That one-two punch of snacks and beverages gives PEP some big advantages worth exploring this week.

For instance, it's able to share resources between those units, running a leaner distribution network than if it were two separate companies. That's a big part of why PEP management has been so adamant about swatting off calls to split the two businesses apart – the economies of scale that Pepsi enjoys from operating both units together are hard to ignore. While Pepsi plays second fiddle to top rival Coca-Cola (KO) on the beverage side, Pepsi has had some great successes in the non-carbonated segment, thanks to brands like Gatorade.

Only half of Pepsi's sales come from outside the U.S. today. But that leaves a lot of opportunity on the table for PEP, especially in the snack segment, where burgeoning middle class populations in emerging markets are demanding higher volumes of ready-to-eat snacks. Don't let Pepsi's size fool you. There's a lot of growth potential in shares this year.

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 the names 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. Follow Jonas on Twitter @JonasElmerraji