Stock Quotes in this Article: AAP, BBY, DIS, PII, LNKD

BALTIMORE (Stockpickr) -- U.S. markets stayed shuttered yesterday for the Labor Day holiday, giving traders an extra session's reprieve to think things over before the big indices test new record highs this morning.

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Not that there's been much to think about in terms of trading lately. We've been in a "buy the dips market" for the better part of the last two years, and the start of August was another textbook dip. With September trading kicking off this morning, it still makes sense to focus on names that are showing strength in this market.

That's why we're turning to a new set of "Rocket Stock" names 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 263 weeks, our weekly list of five plays has outperformed the S&P 500's record run by 78.59%.

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

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Walt Disney

Up first on our list is Walt Disney (DIS), a name that's been stomping the rest of the broad market ever since the calendar flipped to 2014: year-to-date, Disney is up more than 17%. That's more than double the gains that the S&P 500 has churned out so far this year, and the performance gap could widen even further before the end of 2014...

Disney is one of the largest entertainment companies in the world, with a huge portfolio of TV, film, and theme park assets spread across the world. Besides an impressive collection of physical assets, Disney owns one of the industry's most valuable vaults of intellectual property, with names ranging from Mickey Mouse and Donald Duck to Hannah Montana. The firm also owns more grown-up oriented businesses, such as ESPN, which make up a large part of the firm's business today.

ESPN in particular is a cash cow for Disney. The sports network is the most valuable cable network on television, commanding a larger chunk of your monthly bill than any other franchise today. High levels of integration mean that Disney is greater than the sum of its parts: the firm is able to harness that ESPN brand recognition at its theme parks, and it's able to use its characters in everything from TV shows and movies to parks and merchandise. That unmatched monetization capability means that Disney is able to collect large profits at fat margins (net profit margins came in above 19% last quarter).

With Disney parks and cruises coming off of a recession-induced a cyclical low, look for the capital-intense parts of the business to start throwing off returns in a big way in the next few years, boosting Disney's overall returns on investment.

As of the most recently reported quarter, Disney was one of the top holdings in Ken Fisher's Fisher Investments portfolio.

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LinkedIn

LinkedIn (LNKD) is the "professional social network." As such, it's got some big differentiators from its less business-oriented peers. For instance, while other social media firms earn revenue by distracting their users from what they're trying to do (and getting them to click on ads while stalking their friends, for instance), LNKD makes money by helping users with the exact task they're trying to accomplish: find a job, network or hire someone.

That direct revenue generation gives LNKD the most obvious sales channel in the business -- and one of the few that's not completely tied to the advertising market.

LinkedIn also has scale. The firm's 300 million members mean that employers are likely to find qualified candidates for positions on the site -- and job seekers know that employers are willing to put resources into LinkedIn job postings. All of that has added up to stair-step revenue growth at the firm, even if profitability has been exchanged for increasing sales in the last few years. Valuation has been the one big tradeoff at LinkedIn; this stock's $28 billion price tag isn't cheap by any stretch of the imagination, but a strong momentum story helps to reduce some of the risks of buying shares today.

In fact, shares have been on a solid upside trajectory since the middle of July, climbing to test 52-week highs in the last few sessions. With rising analyst sentiment in shares this week, we're betting on LinkedIn today.

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Best Buy

Electronics retailer Best Buy (BBY) is an unlikely name that's been making a couple of recent appearances on our Rocket Stocks list this summer. Even though this stock's share price has gotten shellacked to the tine of 20% since January, shares of BBY are starting to look "bottomy" from a technical standpoint. And as management turns the ship around fundamentally, September could be a very prescient time to start building a position in BBY.

Best Buy is the largest U.S. consumer electronics store chain, a position it earned as much from previous successes as it did from schadenfreude as its biggest rivals folded after financial hardships in recent years. Best Buy operates 1,963 locations spread across the country, a number that's down from more than 4,300 stores at the start of 2008. In the last several years, BBY has been effecting its "Renew Blue" cost reduction plan to improve profitability by closing poorly performing stores and finding new ways to squeeze efficiency out of the business.

There's still the risk that Best Buy gets treated like the physical showroom for Amazon.com (AMZN). But management is finally recognizing that the firm's biggest handicap, large store footprints with big staff and inventory costs, is also its biggest market differentiator. At the same time that e-tailers are scrambling to get products to customers in a shorter timeframe, Best Buy already owns the infrastructure to do just that.

BBY is a transformation trade. Shares are still priced like this stock is about to fail, but contrarians could end up getting a bargain on a business that's coming back.

I also featured BBY recently in "4 Big Stocks on Traders' Radars."

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Advance Auto Parts

Car parts retailer Advance Auto Parts (AAP) is another name that's quietly undergoing a transformation. As DIY sales have faltered in recent quarters, the firm has been building out its wholesale parts business by acquiring competitors like General Parts and Carquest. The result is that AAP's more than 4,000 stores should see growing levels of profitability in the intermediate-term.

Not that profitability has really been lacking for AAP lately. Last quarter, the firm earned net profit margins of approximately 6%, high levels for a retail stock. It says a lot that management is being proactive in cutting exposure to the DIY section of the market this year. The good performance comes from a major economic tailwind in the auto parts business: with an older average car age than ever before in the U.S., more parts are needed to keep those aging cars on the road. A rising tide has been lifting all ships in the parts business for the past several years.

The new acquisitions should put AAP's sales mix in favor of the wholesale market, where lower margins are offset by higher volumes and larger growth rates. The larger store footprint also adds an important scale advantage for Advance, where parts availability is driven by ease of access to locations (especially for the wholesale and commercial parts markets).

AAP has been in rally mode all year long, and that's unlikely to change in the second half of 2014.

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Polaris Industries

Last up is Polaris Industries (PII), a $10 billion maker of ATVs, motorcycles and snowmobiles. Polaris owns an attractive corner of the recreational motoring niche, selling toys for grown-ups through a network of approximately 1,750 North American dealers, and a distributor network that reaches more than 100 countries.

One of Polaris' biggest benefactors has been the Fed. That's because, with rates being held down near zero, the costs of acquiring toys like a new ATV or snowmobile are dirt cheap. The low costs, coupled with increasing consumer spending, give PII an obvious opportunity here. And management is taking full advantage of that with special incentives and infrastructure investment of its own. The firm isn't just relying on organic growth to boost its top line -- Polaris has also been buying complementary brands to its stable, such as the purchase of Indian Motorcycle and small commercial electric vehicle makers.

Polaris sports a solid balance sheet right now, with more than half of its modest debt load offset by cash in the bank. With rising analyst sentiment pouring into shares of PII, we're betting on this Rocket Stock again this week.

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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 CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

Follow Jonas on Twitter @JonasElmerraji