5 Rocket Stocks That Are Ready for Blastoff

BALTIMORE (Stockpickr) -- There's something that the big market indices aren't telling you this summer.

At a glance, May looked like a pretty weak month for the broad market. After all, the big S&P 500 index barely managed to move a full percentage point higher for the month, hardly tacking anything onto pretty paltry 1.64% price gains year-to-date.

But while the broad market was showing investors a mediocre move, lots of individual names were in rally mode.

For example, a full 20% of S&P 500 components actually moved 5% higher or more during the month of May. And one in 10 S&P stocks actually climbed by 10% or more for the month. That's a huge chunk of the market that's making big moves right now.

To find the ones primed for similar upside in June, we're turning to a fresh set of Rocket Stocks worth buying this week.

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 302 weeks, our weekly list of five plays has outperformed the S&P 500's record run by 76.40%.

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

Citigroup

Looking at the year-to-date numbers, Citigroup's (C) run is decent at best. Shares are up about 4% since the calendar flipped to 2015, but that number is a little misleading. In fact, since shares bottomed back in early February, this huge bank has actually managed to rally more than 20%. Clearly, Citi is looking pretty bullish over the intermediate term.

And why shouldn't it? Citigroup is one of the biggest banks in the world, with more than $1.89 trillion in assets. That's been an attractive business in recent years, thanks to access to extremely cheap deposits and growth in lending businesses that generally pay banks bigger lending spreads. With the possibility of a Federal Reserve interest rate hike in the intermediate term, banks such as Citi have the possibility of widening that spread even further, earning returns on equity that are more in line with their historical averages. (That said, boosted capital requirements mean that banking industry returns will still be lower than their pre-2007 numbers going forward.)

Of the big U.S. banks, Citigroup is the one with the most exposure to emerging markets. Citi has big operations in Asia and Latin America, a fact that should parlay into outsized returns over the long-term. Meanwhile, an improved balance sheet and more emphasis on fee-based businesses should boost Citi's legacy U.S. profitability in the coming years.

With rising analyst sentiment coming into this Rocket Stock this week, we're betting on shares. For more on Citigroup, read "Stock Correction May Be Coming, Citigroup Remains Attractive Buy."

Salesforce.com

Salesforce.com (CRM) is having an interesting year in 2015. Since the beginning of the year, CRM has rallied more than 24%, boosted in large part by speculation that the $48 billion software company would find a suitor willing to acquire it for a hefty premium. Talks with Microsoft (MSFT) reportedly broke down last month, in addition to acquisition discussions with other unnamed companies. But even though Salesforce is still for sale, there's reason to believe that more upside lies ahead.

Salesforce builds Internet-based software that enables more than 100,000 customers to run business applications that interact with their customer lists, doing everything from sending newsletters to tracking sales. Because CRM sells software-as-a-service, the firm enjoys a sticky, recurring revenue base with very high switching costs.

CRM has historically pursued growth at the expense of profitability, a strategy that masks the underlying profitability of its business. But with a balance sheet that's basically debt-neutral and deep margins higher up the income statement, Salesforce likely has a lot more wherewithal than most of its detractors imagine.

CEO Mark Benioff reportedly wants $70 billion to take his company off the market. The question is whether CRM will hit that market valuation number by itself before it finds another bidder.

Norwegian Cruise Line Holdings

It's cruising season, and that means that it's high time for $13 billion cruise operator Norwegian Cruise Line Holdings (NCLH).

Norwegian is the No. 3 cruise line in terms of capacity. The firm currently has more than 40,000 berths spread across its fleet of 21 ships. It operates cruises under the Norwegian, Oceania, and Regent Seven Seas banners, sailing to more than 430 vacation destinations around the world.

Being smaller than the industry leaders has some distinct advantages. For instance, on a relative basis, NCLH currently has more new ship capacity on order than its bigger peers, which means that the fleet is transitioning younger more quickly. That's a big selling point for consumers that's extremely costly for those bigger peers to replicate, and it means that the firm can collect higher fares for its cruise offerings. On the expense side of the equation, prolonged low oil prices and interest rates are creating a perfect storm of profitability for NCLH this year.

Buyers are clearly in control of NCLH right now. Year-to-date, this big stock has rallied almost 18% already. This week, we're betting on shares.

McCormick

McCormick (MKC) is the dominant company in the food spice and seasoning market. That may not sound like an especially exciting business, until you think about the fact that this $10 billion consumer staple dominates one of the highest-margin aisles in your local grocery store. The firm's leading brands include Old Bay, Zatarain's and Thai Kitchen in addition to the McCormick label.

The grocery business is McCormick's bread and butter. The firm doesn't just sell spices, seasonings and flavorings under its own brands. MKC is also one of the biggest private-label manufacturers, which means that it uses its huge supply chain capabilities to manufacture store brands as well, effectively wringing the competition out of the business and contributing to about 10% of the firm's consumer sales. Newer convenience-focused products should help McCormick move the growth needle in 2015.

Besides grocery, McCormick also serves restaurant chains and packaged food firms that use its seasonings in their respective products. Because few firms can boast MKC's operational expertise with spices, it's a go-to firm for clients who need help developing and mass-producing the seasonings they use in large-scale food manufacturing.

Meanwhile, heavy marketing spending over the last 12 months should parlay into better brand awareness on MKC's newer, higher-margin consumer products.

Global Payments

Last, but certainly not least, is Global Payments (GPN). This $7 billion payment processor has been in rally-mode all year long in 2015, climbing more that 30% since the start of the year. That's about twenty-times better than the broad market has fared over that same timeframe, which adds up to an astronomical amount of outperformance.

Global Payments acts as a middleman between merchants and banking institutions, giving it an important role in the world's credit card infrastructure. The firm helps more than a million individual merchants accept card payments from their customers. As more payments move electronic, GPN is enjoying a rising tide that should continue to lift all ships in the space. By collecting a tiny piece of a huge number of transactions, GPN generated more than $2.5 billion in revenues last year.

Right now, North America still adds up to about 70% of GPN's revenues, a fact that leaves a lot of open growth potential as the firm seeks more business overseas. That's not to say that growth in the U.S. has been sluggish. A skew toward small and midsize merchants here at home provided sales growth rates near 15% over the last year.

Look out for a potential catalyst later this summer when GPN reports its fourth-quarter numbers.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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