There are plenty of angles to consider when picking stock winners: low P/E stocks, companies selling at a discount to their future cash flows, and more. Even in this market, the analysts at the small-cap stock-picking service Motley Fool Hidden Gems are able to stay ahead of the market by finding undervalued stocks that the market and investors have ignored.
Wouldn't it be great if we could find a way to whittle down our list of prospects beforehand, finding those whose engines are just getting warmed up? Well, we can.
Using the investor-intelligence database of Motley Fool CAPS, I screened for stocks that were marked up by investors before their stocks began to move up over the past three months. My screen returned 126 stocks, including these recent winners:
|
Stock
|
CAPS Rating
Dec. 22, 2008
|
CAPS Rating
March 22, 2009
|
Trailing-
13-week Performance
|
|
Pacific Sunwear (Nasdaq: PSUN )
|
**
|
***
|
80.2%
|
|
QLT (Nasdaq: QLTI )
|
**
|
***
|
20.0%
|
|
Tessera Technologies (Nasdaq: TSRA )
|
**
|
***
|
80.0%
|
Source: Motley Fool CAPS. Trailing performance from March 27 to June 22.
You may remember that QLT was picked as a stock ready to run in February. So while this screen might tell us which stocks we should have looked at three months ago, what we want are the stocks that we ought to be looking at today. I went back to the screener and looked for stocks that were just bumped up to three stars or better, sporting valuations lower than the market's average, and whose price hadn't moved up over the past month by more than 10%.
Here are three stocks out of the 48 the screen returned that are still attractively priced, but which investors think are ready to run today!
|
Stock
|
CAPS Rating
March 22, 2009
|
CAPS Rating
June 22, 2009
|
Trailing-
4-Week Performance
|
P/E Ratio
|
|
Alamo Group (NYSE: ALG )
|
**
|
****
|
(8.8%)
|
10.7
|
|
BGC Partners (Nasdaq: BGCP )
|
**
|
***
|
0.3%
|
10.6
|
|
Weight Watchers (NYSE: WTW )
|
**
|
***
|
3.8%
|
9.8
|
Source: Motley Fool CAPS. Price return from May 29 to June 22.
Though the results you get may be different, because the data updates in real time, you can run your own version of this screen. Let's take a look at why investors might think these companies will go on to beat the market.
Alamo Group
Investors aren't expecting to have to make a last-stand defense of Alamo Group, with its highway maintenance and agricultural equipment. The stimulus spending plan would seem nicely targeted to this farm and roadside machinery maker, and CAPS member Investorloi finds it attractively priced:
Low price to book ratio, near 52 week low with high insider ownership. This stock will pick up once the economy picks up.
BGC Partners
By specializing in the brokering of over-the-counter financial instruments, BGC Partners keeps pace with other specialty brokers like CME Group (NYSE: CME ) . Top-rated CAPS All-Star streetflame likes its financial position:
Clean balance sheet, high yield, revenues and income seem somewhat stable. Could be a big winner as financial markets return to normalcy. I will research more and look for a lower price in real life.
Weight Watchers
Although the business of dieting has grown more competitive, CAPS member JBYRDKS would like industry leader Weight Watchers even more if company insiders had a larger stake in its fortunes:
There are a lot of fat people out there and this is the most reliable weight loss program out there. Decent dividend, but management doesn't own very much stock.
Three for free
It pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page. Why not head over to the completely free CAPS service and let us hear what you've got to say about these or any other stocks that you think are starting to rev their engines.
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