2014 Top Stocks Market, Best Stocks Investment In 2014, Top Stocks For 2014: 5 Rocket Stocks Ready for Blastoff

BALTIMORE (Stockpickr) -- 10 days. That's how far away the U.S. currently sits from running out of money and theoretically defaulting on the national debt. That realization is gut-punching the markets this morning.

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The prospect of a default is bizarre. On one hand, ratings agencies are setting the risks of default pretty low right now -- and so are prices for securities most tightly tied to treasuries. On the other hand, Treasury officials have been publicly reminding congress that we'll default if they don't act now.

So yes, there's a gun to the head of the market right now, the chamber is probably empty.

Even as stocks correct this fall, there's still an opportunity popping up in some of the market's strongest names. That's why we're turning to a new set of Rocket Stocks for this week.

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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 217 weeks, our weekly list of five plays has outperformed the S&P 500 by 92%.

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

Walt Disney

If it's been a great year for stocks, it's been an even better one for shareholders of Walt Disney (DIS). The $117 billion entertainment giant is up more than 31% since the calendar flipped over to January, almost doubling the S&P 500's climb year-to-date. Disney's unmatched collection of intellectual property, and its ability to turn that portfolio into cash throughout its business, gives the firm some big advantages in 2013 and beyond.

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When people think Disney, they think Mickey Mouse. And while the anthropomorphic mouse is certainly a cornerstone of Disney's business, its TV network properties are the real cash cow. Disney earned around half of its profits through television networks such as ABC, A&E and the Disney Channel. ESPN, though, is the star of the show. ESPN is the most valuable network in the world, capturing a bigger part of your cable bill than any other network out there -- and it's all thanks to football. Despite shelling out more than $1.8 billion each year to the NFL for Monday Night Football broadcast rights, the network's model has proven immensely profitable.

Meanwhile, Disney's theme parks are starting to enjoy the other side of the cyclical downdraft that hindered them during the Great Recession. Because Disney is highly integrated, it's able to take popular characters from a film and move them into TV, theme parks and merchandise, multiplying the value of its efforts and trimming costs. Finally, the decision to purchase of Pixar in 2006 was transformational for DIS, and should help to bring in consistent blockbusters in a way that Disney's animation studios haven't by themselves.

Priceline.com

Priceline.com (PCLN) is another firm that's seen strong performance numbers in 2013. In fact, it's even managed to one-up Disney with a 71% gain since the first trading session in January. Breakneck growth on Priceline's income statement has been fuelling the growth in its share price.

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Priceline.com is one of the biggest travel sites in the world. The firm dug out an economic moat by becoming the most popular "Name Your Own Price" travel site, connecting bargain-conscious consumers with excess inventory hotels and airlines were trying to fill at lower prices. While that's niche has changed more recently, Priceline's dominance in online travel hasn't. Priceline's biggest growth driver in recent years has been in international markets like Europe and China, where the firm's foothold is less dominant and travel pricing is less commoditized.

The decision to purchase travel content site Kayak should pan out to be a good one for PCLN. While the acquisition wasn't cheap, content site visitors are stickier than the web traffic that visits Priceline's homepage. With a new traffic driver, Priceline should be able to spread the benefits across its whole network.

Franklin Resources

In a lot of ways, asset management firm Franklin Resources (BEN) is a leveraged bet on stock prices. After all, the firm has more than $815 billion in assets under management spread across stocks, bonds and hybrid funds -- so as asset prices rise, so too do the fees that Franklin is able to charge for the cash under its watch. So far, betting on BEN has been a pretty good move in 2013 -- and I think that will continue to be the case into the fourth quarter.

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Franklin Resources is the fifth-largest asset manager in the U.S., positioning that helps the firm court big money without alienating retail investors who feel burned by the big banks. BEN's team of 130,000 advisors provides a direct way to attract assets across all of its investment styles, although the skew definitely favors fixed income. While bonds generally earn smaller management fees than equities do, as investors warm up to the equity market, Franklin Resources should see its profitability warm up in kind.

Franklin's net margins are huge, with around 27% of every dollar in management fees working its way to shareholders as profits. A big part of that profitability comes from a better-than-average customer retention rate. Customer acquisition costs are some of the biggest hurdles for asset managers, so BEN's positioning works out very well.

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

Under Armour

A lot has changed at Under Armour (UA) in the last few years. In that short time, UA has gone from making niche apparel for hardcore athletes to mainstream gear that can be found in more than 100 company-owned stores across the country and thousands of other brick-and-mortar retailers. But UA's performance-focused roots continue to drive the firm's ability to collect top dollar.

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Sports apparel is a big market, but it's a saturated one, so few up-and-comers have successfully challenged the foothold from brands like Nike (NKE). But Under Armour has. The firm's extension in to new categories like footwear about five years ago should continue to drive top-line growth and premium dollars from consumers who see Under Armour as a performance brand.

As Under Armour battled the big name sportswear companies here at home, the firm really hasn't paid a whole lot of attention abroad. In total, overseas sales only make up under 10% of the firm's total revenues; but that lack of international exposure provides ample growth opportunities once UA starts to exhaust its top-line expansion stateside. Shares of UA are far from cheap right now, but the value of the brand and the potential for bigger markets offset the rich price tag.

PetSmart

Pet supply retailer PetSmart (PETM) has a big trend pushing at its back in 2013. Americans love their pets, and to show it, they're spending more on Fido and Whiskers than ever before. That higher per-capita pet spending has been translating to bigger sales numbers at PetSmart's 1,250 big box stores.

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PetSmart sells pet food, supplies, services and even small pets at its locations. As pets get treated more and more like full fledged family members, so is their allotment of the family budget. That's drastically changed the sales mix at stores like PetSmart, as more emphasis on higher-quality all natural pet foods and more expensive and elaborate toys and grooming products fill the shelves. That focus on quality also translates to higher margins for PETM. More than half of sales come from consumables such as food and treats, which means repeat business.

Another important margin driver is services. Grooming, boarding, and training only make up around 11% of PetSmart's total sales, but they're rich in margin and tend to be sticky. After all, pet owners are less likely to switch their boarding to unfamiliar places purely for cost. Analysts are turning bullish on PetSmart from a sentiment standpoint this week, so 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.

5 Rocket Stocks Ready for Blastoff

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