Stock Quotes in this Article: GMCR, KR, PII, SLB, YHOO

BALTIMORE (Stockpickr) -- Ugh, I wouldn't want to be Larry Summers this morning. The former Treasury secretary set off a rally in stock futures yesterday, when he withdrew his name from the Fed Chairman job. The market has voted: Investors hate Larry Summers.

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But don't worry too much about Larry. It's probably safe to say he's got a thick skin.

Instead, investors should be paying attention to the market's reaction. As I write just ahead of the open this morning, equities are pointed at some serious follow-through this Monday. That's a big deal after a technically-significant bounce that slingshotted stocks 1.98% higher last week.

And it's creating some buying opportunities this week. To make the most of them, we're turning to a new set of Rocket Stocks.

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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 214 weeks, our weekly list of five plays has outperformed the S&P 500 by 88.85%.

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


2013 has been a stellar year for shares of oil service giant Schlumberger (SLB). Since the calendar flipped over to January, SLB has rallied more than 25%, beating the broad market's impressive pace by double digits. As oil prices linger on the high end of their historic range, SLB is well positioned to keep ticking higher.

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Schlumberger provides must-have services to national and supermajor oil firms as well as smaller E&Ps, offering up niche services like seismic surveys and well drilling and positioning. In a nutshell, SLB's job is to pull oil out of the ground as efficiently as possible. Oil firms turn to Schlumberger because the tasks they need to accomplish are too nuanced or proprietary to pull off in-house. So as long as the company continues to pour cash into R&D for drilling technology and software, the firm should continue to score lucrative contracts.

Some of Schlumberger's most attractive opportunities right now come from overseas. The firm is one of the largest oil servicers in Russia, a key growth market in the years ahead. It's also got an important presence in smaller oil markets, where it's a big fish in a small pond. A big scale and stellar reputation should guarantee Schlumberger an attractive piece of the oil pie for years to come.


It's been a challenging year for Yahoo! (YHOO), but you wouldn't know it from this stock's price action. Yahoo! has rallied more than 47% year-to-date, buoyed by major changes in the firm's structure -- and conspicuous leadership from CEO Marissa Mayer. But Yahoo!'s new logo is a good metaphor for the transformation at the company: The new logo was announced with much excitement, but most users probably wouldn't have noticed it otherwise.

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Arguably paying too much for Tumblr, and still lacking a real unique selling proposition the new Yahoo! looks way too much like the old Yahoo!.

But while this stock built a reputation for being a dot-com era dinosaur, investors neglected the fact that this stock has had a really attractive business all along. Despite some big missteps, Yahoo! remains one of the biggest destinations on the internet, and all those eyes on its Web sites contribute to hefty net profit margins from operations.

Yahoo!'s cash position has been a blessing and a curse for investors in the last few years. A brilliant investment in Alibaba has contributed to a cash and investment position of more than $7.6 billion at last count, covering more than a quarter of YHOO's market cap. While that does help to reduce risk, Yahoo! either needs to figure out internal investments that yield meaningful rates of return, or give the money back to shareholders.

Just don't underestimate this stock's potential in 2013; Yahoo! may be a dinosaur, but at least it's a T-Rex.


$20 billion grocery store chain Kroger (KR) has seen some surprising upside of its own this year: shares have climbed 50% since the first trading day in January. That performance may seem surprising for a 130 year old large-cap grocer, but this stock's rally has been predicated on out-executing the competition for years now.

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Kroger operates more than 2,400 supermarkets, 750 convenience stores, and 325 jewelry stores under a handful of popular brands. Those marquees include Ralphs, Fred Meyer, Kwik Shop and Turkey Hill in addition to the firm's namesake chain. An ongoing acquisition plan for Harris Teeter stands to add another powerhouse grocery chain to KR's portfolio this year, adding even more separation between Kroger and its most well known competitors.

The grocery business is characterized by paper thin margins and zero competitive advantages. Kroger changed that by offering fuel as loss leader to pull in customers at around half of its locations. While many peers have copied that strategy, the existence of gas infrastructure at such a large percentage of its locations gives Kroger some built-in advantages. In many cases, rivals don't have the option to add fuel to as many of their own stores. From there, huge private label presence on Kroger's shelves help spur bigger margins than the rest of the industry.

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

Green Mountain Coffee Roasters

As badly as short sellers want to hate on Green Mountain Coffee Roasters (GMCR), betting against the multiyear rally in this $12.7 billion beverage stock has been about as wise as eating from a box with a skull and crossbones on it. And as a bull market continues to lift all ships, Green Mountain's ship is going to keep floating above the others.

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Green Mountain owns Keurig, the brand of beverage brewers that use self-contained K-Cups to make coffee, teas, and other drinks. While Keurig's "fad" status has certainly helped tip the deck against GMCR, the fact remains that the firm has done most of the hard work in getting Keurig machines accepted by consumers. With brewers essentially ubiquitous at this point, the firm is able to make money on its cash cow: the K-Cups.

Keurig's individual-serving cups have big margins and a big installed base. With huge convenience and the relatively large sunk cost that consumers have put into their Keurig machines, it's a sticky business with big switching costs. Consumers who buy a Keurig are much less likely to spend the money on a competing brand of proprietary coffee pods.

I've said before that GMCR is far from cheap right now. But its momentum trajectory is showing few signs of fizzling out, especially as direct competitors such as Starbucks (SBUX) continue to sell K-Cups of their own. Don't bet against GMCR in September – buy this Rocket Stock instead.

Polaris Industries

Last, but certainly not least, is Polaris Industries (PII), the power sports equipment manufacturer. In short, Polaris makes toys -- toys for grown ups. The firm's namesake brand manufactures ATVs and snowmobiles, and it also owns storied motorcycle brands Victory and Indian, and GEM light electric vehicles. With more than 1,650 dealers in North American alone, Polaris owns a significant chunk of the power sports industry, churning out more than $3.2 billion in sales last year, and net profit margins approaching 10%.

Economic recovery is fueling a boom market for Polaris' vehicles, especially now that rates continue to hover near their historic floor. Borrowing money is cheap, and that means that financing a motorcycle or ATV has become more affordable than ever before. With relatively low acquisition costs, buying one of Polaris' machines is a lot easier to stomach than many other recreation options, and so sales continue to look attractive this year.

Financially, Polaris is in solid shape. The firm carries nearly $280 million in cash and investments on its balance sheet, easily offsetting $107.6 million in total debt. PII is well positioned to run over any economic hiccups in the foreseeable future -- and with rising analyst sentiment in shares, we're betting on this name 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.


Follow Jonas on Twitter @JonasElmerraji