3 Stocks Ready to Roar

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There are plenty of strategies for picking stock winners, from seeking low P/E ratios to searching for companies selling at a discount to their future cash flows. At the small-cap stock-picking service Motley Fool Hidden Gems, even in this market, the analysts are able to stay ahead of the pack by finding undervalued stocks that Wall Street and investors have ignored.

Yet what if we could find a way to whittle down our list of prospects beforehand, to discover stocks whose engines are just getting warmed up?

Using the investor intelligence database of Motley Fool CAPS, I screened for stocks that were marked up by investors before their stocks began to rise over the past three months. (The overall market, for comparison, moved sharply higher before trading sideways.) My screen returned 154 stocks when I ran it, no doubt reflecting the market's continued recovery, and included these recent winners:

Stock	CAPS Rating March 22	CAPS Rating June 22	Trailing 13-week Performance
Coldwater Creek (Nasdaq: CWTR)	**	***	56.8%
Pactiv (NYSE: PTV)	**	***	28.3%
Sangamo Biosciences (Nasdaq: SGMO)	**	***	83.2%

Source: Motley Fool CAPS Screener; trailing performance from June 26 to Sept. 21.

We previously picked Pactiv as a stock ready to run in March. So while this screen might tell us which stocks we should have looked at three months ago, we'd rather discover the stocks we ought to be looking at today. I went back to the screener in search of stocks that were just bumped up to three stars or better, sported valuations lower than the market's average, and had risen in price by just 10% or less over the past month.

Of the 32 stocks the screen returned, here are three attractively priced candidates that have earned investors' confidence:

Stock	CAPS Rating June 21	CAPS Rating Sept. 21	Trailing 4-Week Performance	P/E Ratio
Republic Airways (Nasdaq: RJET)	**	***	7.7%	6.7
The Pantry (Nasdaq: PTRY)	**	***	8.9%	5.4
Valeant Pharmaceuticals (NYSE: VRX)	**	***	4.8%	7.9

Source: Motley Fool CAPS Screener; price return from Aug. 28 to Sept. 21.

Though the results you get may be different, since the data is dynamically updated in real time, you can run your own version of this screen. In the meantime, let's examine why investors might think these companies will go on to beat the market.

Republic Airways
Once purely a contractor, flying routes for other airlines (think Delta Air Lines (NYSE: DAL) or United), the carrier now competes against those rivals as well. CAPS All-Star checklist34 says the company's rewards still outweigh the risks, now that it has purchased Midwest and bankrupt Frontier Airlines:

I am willing to bet against an everything-went-wrong situation because I think RJET has competent management, and, frankly, I think that beating LUV which at the time had a market cap 25 times larger than RJETs in the auction for Frontier speaks to that managerial competence.

The Pantry
The market rally has been fueled by less-than-stellar companies. CAPS member jemsa thinks convenience store The Pantry will finally join in the festivities: "This convenience store operator was left behind during the recent rally. I suspect that this stock will become "fashionable" again in the near future."

Valeant Pharmaceuticals
All-Star CAPS member IBDvalueinvestin thinks Valeant Pharmaceuticals' increased earnings guidance is a reason for optimism. The company says it "delivered sales and earnings growth at the high end of our expectations" with its multipronged approach to growth.

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.