These 5 Rocket Stocks Are Ready for Blastoff

While the S&P 500 may be more or less unchanged from where it started the month, investors are hoping to end September on a strong note this week, following new all-time highs in the Nasdaq Composite and an S&P that ended Friday's session less than 1% below its all-time highs.

The S&P is up 7.6% on a total returns basis so far in 2016, a run of performance that puts the big stock market index on track to finish the year with 10.6% gains. That's a stark contrast from how the S&P started the year -- and that upside potential could even be magnified if the big market indices continue setting new records, ending the sideways grind that's characterized September.

Put simply, stocks could have a lot more fight left in them this year.

To take advantage of the momentum we're seeing in the market this fall, we're turning to a fresh batch of Rocket Stocks to buy for gains in September.

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 368 weeks, our weekly list of five plays has outperformed the S&P 500's record-breaking run by 80.0%.

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

Adobe Systems

Leading off the list this week is $53 billion software stock Adobe Systems  (ADBE) . Adobe is the leading developer of content creation software. The firm's flagship content creation applications include Photoshop, Acrobat, Dreamweaver and After Effects, among others. That suite of applications is used by creative professionals to produce everything from images to videos to page layouts and websites. The fact that Adobe's software is a must-have to create revenue-generating assets makes it an easy sell.

Much of Adobe's competitive advantage comes from a large installed base and big sunk costs from creative pros. For instance, a graphic designer who's invested the time to learn Adobe's tools is less likely to jump ship for a competing utility. Because of the relatively steep license cost for its products, piracy has long been an issue for Adobe - but the transition to an online-based subscription model has been helping to change Adobe's business model while simultaneously reducing the sticker shock that comes from purchasing a license. Instead of paying thousands of dollars for a retail box version of Adobe's Creative Suite, Creative Cloud access can cost as little as $50 a month.

Adobe has been building on that success in recent years, pushing offerings like Adobe Marketing Cloud, which was introduced in 2012 and now contributes about a third of revenues. The transition to cloud-based subscriptions is attractive from a business standpoint because it frees the firm's revenues from the lumpiness of being tied to new version releases; instead, Adobe collects consistent annuity-like subscription fees from its user base.

As customer migration to the cloud remains strong, profit margins should continue to scale higher in the quarters ahead.

Becton Dickinson 

It's already been a great year for Becton Dickinson (BDX) . If the calendar year screeched to a halt today, this $38 billion medical product maker would finish 2016 up almost 18% on a total returns basis. And that positive momentum isn't showing any signs of slowing as we head into the final stretch of the year.

Becton is one of the world's biggest manufacturers of medical and surgical products, stocking hospitals and doctors' offices with scalpels, syringes and surgical instruments. Put simply, if you've had so much as a checkup done lately, chances are you've come in contact with BD's product lines. The firm also has exposure to the higher-end of the medical device field, with a line of diagnostic equipment, and equipment like ventilators and infusion pumps. Becton's core business is relatively boring -- but despite the lack of excitement, there's a lot to like about the sale of consumables, especially as patients in BD's core markets continue to get older, on average, increasing medical care needs.

Most of BD's sales -- about 60% -- come from abroad today. That fact has been a headwind as Becton and peers heave dealt with a strong dollar weighing on profitability. The prospect of a reversal of fortunes for the greenback could come with long-term profitability growth implications, even if growth in Becton's actual business stays unexceptional.

Delphi Automotive

Delphi Automotive  (DLPH)  is one of the biggest auto parts suppliers in the world -- so even though your car may not have a Delphi logo visible anywhere, there's a pretty good chance this company had something to do with your vehicle. Delphi's customers include major multi-national manufacturers like GM, Volkswagen and Toyota.

Delphi is well-diversified. Not only does the company have a large number of customers that it deals with, but its products also span multiple automotive systems, including vehicle safety, engine management, and electronic systems. Because Delphi's products are deeply integrated into vehicles' designs, automakers have very high switching costs -- it's rarely cost effective to move to a different supplier for a mission-critical part like a powertrain. That fact gives Delphi bargaining power and an important edge in its big installed base.

Macro tailwinds play an important part in the Delphi story right now. In the U.S., which is Delphi's largest geography at more than a third of sales, the average car on the road is older than ever before at the same time that borrowing costs are lower than ever before, driving demand for new cars. That trend should help to offset softness in regions like Europe and China, where economic hiccups haven't resolved themselves quite yet on Delphi's income statement.

With rising analyst sentiment in shares this week, we're betting on this Rocket Stock.

Essex Property Trust

Residential real estate investment trust Essex Property Trust  (ESS)  is one of the biggest multifamily apartment REITs on the market, with more than 59,240 units spread across 243 properties. Essex's properties are focused on the West Coast, with 84% of the portfolio split between Northern and Southern California and the balance in Seattle. That combination of attractive coastal real estate markets gives the firm a portfolio in demand-heavy cities where homebuyers are getting priced out of the market.

As a residential REIT, Essex has some differences versus a conventional commercial REIT. For instance, housing landlords don't lease units on the long-term triple-net bases that make most REITs so attractive to yield-seeking investors. Instead, the firm's units are generally leased on an annual basis in locales that tend to have tenant-friendly housing laws. Despite that, demographics make Essex's portfolio particularly attractive in the expensive West Coast geographies where the firm operates. As more millennials start households, Essex's apartments in the strongest job markets should continue to see strong demand.

Long-term, Essex has a track record of returning value to shareholders in the form of dividend payouts. Currently, the company's dividends add up to a 2.8% yield. That payout only becomes more attractive as the Fed continues to prolong rate hikes in 2016.

Shares have been trending higher since the middle of the summer. That momentum could carry this stock to multi-month highs this fall.

Goodyear Tire & Rubber 

Rounding out our list of Rocket Stocks is $8.5 billion tire stock Goodyear Tire & Rubber (GT) . Goodyear has some of its macro story in common with Delphi. More new car shipments mean more sales for the firm, which has the top brand share among automakers for standard equipment. That positioning is important; consumers are more likely to rebuy OE tire brands when purchasing replacement tires.

And when consumers opt to go with a different brand for replacements, Goodyear has attractive positioning. The firm is the No. 1 tire brand in the U.S. based on brand awareness and purchase intent. Industry trends are pushing toward more advanced tire technologies equipped on new cars, which in turn means higher per-unit selling prices for Goodyear. That's especially true in the luxury segment, where Goodyear has a significant presence as original equipment and where style and features often trickle down to more mainstream models over time.

Goodyear's positioning as the top brand in tires means that it also has the best distribution and availability at independent tire shops, a fact that often trumps all others when it comes to consumer tire choice. While Goodyear distributes globally, North America still accounts for almost half of sales. That hefty exposure here at home, where sales remain strong and they're denominated in dollars, has been an important boost to Goodyear's fortunes.

With rising analyst sentiment in Goodyear this week, we're betting on shares.

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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