3 Stocks Ready to Roar

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

But what if we could whittle down our list of prospects beforehand, to find those whose engines are just getting warmed up?

Using our investor intelligence database at Motley Fool CAPS, I screened for stocks that were marked up by investors before their share prices rose over the past three months. My screen returned 143 stocks when I ran it, no doubt reflecting the market's continued recovery, and included these recent winners:

Source: Motley Fool CAPS screener; trailing performance from Dec. 18, 2009, to March 16.

Keryx Biopharmaceuticals, in fact, was picked as a stock ready to run in December. But while this screen might tell us which stocks we should have looked at three months ago, we'd rather find the stocks we ought to be looking at today. I went back to the screener and looked for stocks that had just been bumped up to three stars or better, that sport valuations lower than the market's average, and that haven't appreciated by more than 10% in the past month.

Of the 35 stocks the screen returned, here are three that are still attractively priced and that some investors think are ready to run today:

Source: Motley Fool CAPS screener; price return from Feb. 19 to March 16.

You can run your own version of this screen over on CAPS; just remember that the data's dynamically updated in real time, so your results may vary. That said, let's examine why some investors might think these companies will go on to beat the market.

Coca-Cola Enterprises
Now that Coca-Cola is purchasing the North American assets of its best bottler, Coca-Cola Enterprises will be able to focus on developing the less mature European markets. Some analysts believe that move gives it even better growth prospects than before.

CAPS All-Star TMFConan sees both Coca-Cola and its bottlers being better off. "KO's move to acquire bottlers will better position them to access new specialty markets."

Fidelity National Financial
CAPS member aitraders points out the obvious truth many overlook in expecting title insurer Fidelity National Financial to recover. Its product is a requirement if you're buying a house, and if that market doesn't recover, we'll probably have more serious concerns. aitraders writes:

You have to have title insurance. The real estate industry doesn't function without it. FNF is now the largest and has the LandAmerica acquisition in its rear view mirror. Trading below book value, and at least on the surface committed to a dividend, they have positioned their balance sheet and cost structure to rebound well when the real estate industry stabilizes.

Lithia Motors
Lithia Motors is probably the biggest car dealer you've never heard of, offering 26 brands of new cars and all brands of used cars in 12 states, primarily in the West. General Motors and Chrysler vehicles make up nearly half of its sales and profits, though the better bet would have been Ford (NYSE: F), which accounts for only 5% of its sales. Yet with the auto industry looking healthier these days, sales at Lithia just might take off again.

Fewer than 100 CAPS members have weighed in on the company, and of those, just 28% think it won't beat the broader market averages. Steer yourself to the Lithia Motors CAPS page and let us know what you think.

Three for free
Are these companies still a good value and ready to make their move? I'm heading over to CAPS to mark them to outperform the broader averages. Join me there, or let us know what you think in the comment box below.