Which Stocks Can Keep Up A Winning Streak?


It's been a volatile year, and the markets show no signs of calming down. Morningstar analyst John Coumarianos has been picking his way through this year's winners, looking for those that are likely to keep winning, like Alcoa.

"Alcoa had a terrific year," he told CNBC. "We think it still has room to run, however."
He pointed out that Alcoa owns 24 percent of the world's reserves of bauxite, the essential ingredient of aluminum. He sees demand for aluminum growing, and calls the stock a bargain and "a terrific long-term holding."

With the world ready to pop the cork on another holiday season, Coumarianos also likes Diageo, the world's largest producer of spirits. The owner of such brands as Johnnie Walker Scotch and Tanqueray Gin has "a terrific distribution network in the United States,"and although sales are expected to be flat in Europe, we forecast very good growth in Asia for the firm."

He sees eBay as a company with a high stock price that's capable of going higher.
"If you're a buyer, you've got to go there, because that's where the sellers are; if you're a seller, you've got to go there because that's where the buyers are," he said.
Borrowing a phrase from Warren Buffett, he called eBay a "wide-moat company...a company with a great competitive advantage."

Coumarianos is cautious about Celgene. He sees the $2.9 billion the company paid for Pharmion this week as a very high price.

"We don't dislike the business," he told CNBC, "We just think it's worth less than what it's trading for now."


Tech darling Research In Motion gets a thumbs-down from Coumarianos though because "they are facing some competition, and we just think the future profits don't justify the current price."

Great advantages, like Research In Motion being the first in its field, are no guarantee of future performance he said, and that goes for diamond merchant Blue Nile as well, even with the holidays ahead.

"We actually love this business," he said. "Blue Nile has what we call a 'negative cash conversion cycle.' It's a very fancy way of saying they collect money from their customers before they have to go out and buy their diamonds, so they don't have to own inventory. It's truly an amazing thing for a business to be able to do that; however, we just think the stock has gotten ahead of itself."

Coumarianos owns Diageo, but none of the others.