Stock Quotes in this Article: GMCR, ILMN, KMB, PEP, WDC

BALTIMORE (Stockpickr) -- It's earnings season, and so far, the numbers are looking impressive. Out the gate, 70% of early reportingS&P 500 names have met or beat earnings expectations. But a whopping 78% of individual names in the big index are down over that same stretch, since earnings season started.

>>5 Toxic Stocks You Need to Sell in July

The clear takeaway is the earnings don't matter as much as most investors think -- at least not in their raw form.

But while the price direction from quarterly financial releases is far from obvious, earnings can certainly inject volatility into the marketplace. Last week was the fourth-biggest drop of 2014, and two of the other four took place during earnings season as well. Want to navigate the noise? Then focus on the "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 257 weeks, our weekly list of five plays has outperformed the S&P 500 by 79.51%.

>>5 Stocks Ready for Breakouts

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

PepsiCo

First up is PepsiCo (PEP), a snack food and beverage giant that provides some defensive posturing during what's likely another corrective week for the broad market.

>>3 Big Stocks Everyone Is Talking About

"Defense" isn't quite the right word, though. Pepsi hasn't just been "not losing" in 2014 00 it's been outperforming the S&P 500 year-to-date as well. Since the calendar flipped to January, PEP is up 8.3%, while the S&P has moved 6.45% higher over that same stretch.

PepsiCo is a whole lot more than the cola brand where it got its name. PepsiCo is also the biggest snack food company in the world, with a portfolio of snack food names that includes Lay's, Doritos and Quaker. The firm's revenue is split evenly between beverages and snack foods, and that big diversification gives PEP some equally big advantages. For instance, it's able to share resources between those units, running a leaner distribution network than if it were two separate companies.

Today, Pepsi has big exposure to the U.S. Around 50 cents of every sales dollar is generated here, so Pepsi has room to expand its reach overseas without worrying about saturation just yet. That means that despite a $136 billion market capitalization, there's a lot of clear runway available for PEP if the firm can push the throttles forward, particularly in emerging markets.

Keep an eye out for second-quarter earnings on July 23.

Kimberly-Clark

Kimberly-Clark (KMB) is another staid blue chip that's beating the S&P so far this year. Since the calendar flipped to January, KMB has rallied 8%. Tack dividend payouts onto the end of that, and the number ramps up to 9.45%. And this week, with rising analyst sentiment in shares of KMB, it's making our Rocket Stocks list.

>>5 Big Trades to Conquer a Correcting Market

Kimberly-Clark is a tissue, diaper and paper towel giant. It's the firm behind a plethora of household name brands, including Kleenex, Scott, Kotex and Huggies. While KMB's offerings are frankly pretty mundane, they boast customer stickiness (it takes a lot to drive parents to roll the dice on a new diaper brand), and that in turn provides hefty net profit margins that scrape up against 10%. Recently, the firm has been working to boost those margins more, exiting unattractive markets that don't contribute enough to the bottom line.

The firm's plan to spin off its health care division into Halyard Health later this year should help to unlock some shareholder value from a business too boring for even KMB to pursue. Meanwhile, there's a lot more to like about KMB's consumer business.

Western Digital

Next up on our Rocket Stocks list this week is hard drive maker Western Digital (WDC). With around 40% of the global market, WDC is the biggest hard drive maker in the world, a distinction that gives the firm some big tailwinds right now. As cloud computing continues to add demand for server storage around the world, hard drive makers are working overtime to fill those orders.

>>5 Stocks Insiders Love Right Now

Despite Western Digital's dominance in the hard drive space, there's a big target on its back right now. Up to this point, solid-state drives have been too costly to become economically feasible for many applications, but that's changing quickly -- WDC management understands that the firm will need to stay on top of the new trends in order to keep their throne. To do that, the firm has been making strategic investments (like the acquisition of STEC last summer) that should keep Western Digital's name inside enterprise server rooms in the decades ahead.

From a financial standpoint, Western Digital is in excellent shape. The firm carries $2.5 billion in net cash, enough to cover more than 10% of its market capitalization at current price levels. That big pile of dry powder should give WDC the resources to stay a step ahead of the demand curve for computer storage.

Illumina

Life science company Illumina (ILMN) has been on fire in 2014. Since the first trading session of the year, ILMN is up 60%, outperforming the rest of the market tenfold. And there's reason to look for more of the same at the San Diego-based firm for the rest of the year.

Illumina manufactures tools for genetic analysis, a space that's been growing quickly in the last few years. Best of all, most of Illumina's products are both high-end and consumable -- they're used to collect and analyze genetic material, and then they're discarded. The result is a business with hugely sticky recurring revenues and net profit margins in the double digits. The growing popularity of genetic therapies should ensure that ILMN's stair-step growth continues; while genome sequencing is still a relatively uncommon procedure, a fast-paced growth rate, coupled with Illumina's unique expertise, makes this name particularly exciting.

Don't mistake Illumina for a cheap stock -- it's not. Shares currently trade for a triple-digit earnings multiple, and the firm's balance sheet is effectively debt neutral. That said, the firm should see major margin expansion as genome sequencing is used more commonly. In 2014, ILMN's momentum wave looks worthy of riding into the second half of the year.

Keurig Green Mountain

Last up is Keurig Green Mountain (GMCR), the $20 billion Vermont-based company that transformed the single-serve coffee business. Now, with a big investment from Coca-Cola (KO), GMCR is ready to do the same thing for soda with its forthcoming Keurig Cold machine. Even without another blockbuster drink machine, there's good reason to pay attention to Keurig in 2014.

Keurig Green Mountain perfected the "razor blade model" of business. By selling the convenience of its proprietary brewers, GMCR is able to generate recurring revenues with big margins. And now, the firm's huge installed base is translating into significant cash generation. The firm's partnerships with other well0known brands (including rivals such as Starbucks (SBUX)) is a hat tip to the power of the K-cup today. While the expiring K-cup patent is a black cloud, new products like the Keurig Cold and K-cup 2.0 mitigate the risks.

While Keurig is another example of a momentum name with a rich valuation, the 34x earnings multiple on shares today isn't exactly a pie-in-the-sky price tag. GMCR has attainable growth priced into shares. So, with rising analyst sentiment in Keurig Green Mountain this week, we're betting on upside to continue in this Rocket Stock.

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.


RELATED LINKS:







Follow Stockpickr on Twitter and become a fan on Facebook.

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