Stock Quotes in this Article: COV, DLB, ETFC, JNPR, UNP

BALTIMORE (Stockpickr) -- Buckle your seatbelt: Volatility is on the rise this week. By Friday's close, the VIX Volatility Index was up more than 31%, a big spike considering the relatively low levels it's stayed at for the last year.

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Last week's late selloff shoves volatility to the highest level we've seen since September.

Volatility, though, isn't necessarily a bad thing (even though it's characteristic of down-side moves). And considering the S&P 500's enormous rally, investors shouldn't be terribly surprised by some froth at the top. As I mentioned on Thursday, we're still in a "buy the dips market." Even the 2% decline in stocks in their most recent session doesn't change that.

So while most investors suddenly duck and cover, we're looking at five new Rocket Stock names to make the most of this week's price action.

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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 233 weeks, our weekly list of five plays has outperformed the S&P 500 by 85.02%.

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

Juniper Networks

Investors love an underdog -- which might have something to do with the fact that No. 2 IP networking firm Juniper Networks (JNPR) has rallied more than 22% in the last 12 months, while standard bearer Cisco Systems (CSCO) has only managed to make its way 5% higher over the same period.

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Juniper's better-than-expected fundamental performance may have something to do with that outperformance too. Either way, JNPR is enjoying some upward momentum, especially after last week's positive earnings call.

Juniper designs and sells hardware and software that enable IT infrastructure to communicate and remain secure. The firm has a stellar business in supplying carrier routers, telecom equipment that's been in high demand thanks to network expansion efforts from telcos. It's also grabbing a growing share of the datacenter equipment sold worldwide, another business that's got a stiff tailwind pushing at its back. While the scale difference is substantial between JNPR and Cisco, that also means that any market share Juniper steals from its rivals matters more for it.

From a financial standpoint, Juniper is in excellent shape right now. The firm boasts $4.1 billion in cash and investments, more than enough to offset its billion-dollar debt load. Juniper's profit and sales trajectory looks auspicious as we head into 2014. If it can pull a repeat performance next quarter, expect to see another double-digit year for shares.

Union Pacific

It's a little funny to think that railroad giant Union Pacific (UNP) is a Rocket Stock this year. After all, compared with a technology innovator such as Juniper Networks, trains feel like stone age tech. But dig a little deeper, and UNP paints a very different picture. Not only are the big macro trends pointing in this railroad's favor in 2014, but Union Pacific is also delivering record financial performance right now.

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Here's why now is the time to take advantage.

Union Pacific is the largest railroad in North America, with around 32,000 miles of track spread across 23 U.S. states, Canada, and Mexico. Railroads may not be new technology, but their efficiency is hard to argue with. Particularly with oil prices sitting at the high end of their historic range, U.S. rail transport is an exceptionally efficient means of moving massive volumes of freight across the country. Compared with trucks, rail shipping generally costs around one-fourth as much per ton shipped, so as higher oil costs get forecasts in years ahead, shippers become much more willing to ship via rail freight.

Last week, UNP announced that 2013 was a year of record revenues and profitability for the firm, tacking another $2 billion of post-dividend free cash flow onto its balance sheet. Railroads may not be the sexiest industry for 2014, but it could be one of the most profitable for investors.

Dolby Laboratories

Mid-cap entertainment technology firm Dolby Laboratories (DLB) is another name that's enjoying some strong momentum of late; since the calendar flipped over to January, shares of the firm have rallied more than 7%. For comparison, the S&P is down more than 3% over that same period. That sort of relative strength is key to staying afloat when the market's in corrective mode.

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Dolby Labs develops surround sound technology for everything from movie theaters to automobiles, TVs and computers. Three out of every four dollars Dolby earns comes from licensing its technology to electronics makers; the rest comes from professional equipment sales. Dolby owns patents that maximize users' audio experiences, and for that, it earns a piece of every DVD and Blu-Ray sold today. While the key Dolby Digital patents are slated to expire by 2017, the strength of the Dolby name and the pace of new content delivery methods should both help to mitigate some of those potential licensing losses. Dolby's mirrored "D" logo isn't likely to disappear from your devices anytime soon.

Better yet, Dolby currently boasts a balance sheet with nearly $1 billion in net cash and investments: enough to pay for almost a quarter of the firm's current market capitalization at current prices. That's also good enough to shove DLB's price-to-earnings multiple back down into the mid-teens.

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

E*Trade Financial

As the market goes, so goes E*Trade Financial (ETFC). E*Trade is a discount brokerage firm -- one of the first mainstream online discount brokers, in fact. Today, the firm's offerings reach beyond just retail brokerage: E*Trade is also a consumer bank, and provider of retirement services for large companies.

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The decision to form a bank holding company was born out of necessity in 2008. The firm was leveraged to the brink, and it needed access to the cheap capital that Uncle Sam was providing that special class of financial services firms. But banking is extremely complementary to retail brokerage, and the cheap source of deposits for E*Trade should provide substantial return opportunities since it's able to make traditional loans as well as higher-interest margin loans for its investment customers.

In a big way, E*Trade's legacy business is a leveraged bet on the stock market. As retail investors become more engaged by upside in the S&P (and their accounts grow), ETFC should be able to generate more commission revenues. The firm has a balance sheet that's in solid shape in 2014, and it's got extra downside protection from equities thanks to its banking arm.

As interest rates get upwardly mobile, expect E*Trade's bottom line to grow materially.

Covidien

Last, but certainly not least, is medical device maker Covidien (COV). Health care has been one of the best-performing sectors over the past few months, and Covidien has been no exception. After some big changes in 2013, this stock is ready to continue move higher this year.

After spinning off its pharmaceuticals business into Mallinckrodt (MNK) last year, COV became a pure-play medical device and imaging manufacturer, businesses that are expected to grow significantly over the next few years thanks to demand from more liberal insurance rules and aging demographics. With generic pharma separated from COV's income statement, the firm should be able to produce bigger margins for its wide offering of devices. Better, several of Covidien's newer product launches have the potential to be surprise sellers in 2014.

Because COV spends considerable cash on R&D, it's able to scale down development costs dramatically (and save profitability) during periods of economic belt-tightening. Likewise, the firm's balance sheet provides enough dry powder to invest in growth through acquisitions within its newly concentrated focus.

With rising analyst expectations in COV this week, we're betting on shares.

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

Follow Jonas on Twitter @JonasElmerraji