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 are able to stay ahead of the pack by finding undervalued stocks that Wall Street and 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 just 50 stocks when I ran it, no doubt reflecting the market's turmoil during that time, and included these recent winners:

Stock

CAPS Rating
Feb. 12, 2010

CAPS Rating
May 13, 2010

Trailing 13-Week
Performance

Advanced Energy Industries

**

***

19.9%

Anheuser-Busch InBev (NYSE: BUD  )

**

***

11.2%

Liberty Global

**

****

10.8%

Source: Motley Fool CAPS Screener; trailing performance from May 14 to Aug. 12.

Anheuser-Busch InBev, in fact, was previously picked as a stock ready to run in May. But while this screen might tell us which stocks we should have looked at three months ago, we'd rather find 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, sport valuations lower than the market's average, and haven't appreciated by more than 10% in the past month.

Of the 66 stocks the screen returned, here are three that are still attractively priced, but which investors think are ready to run today:

Stock

CAPS Rating
May 12, 2010

CAPS Rating
Aug. 12, 2010

Trailing 4-Week
Performance

P/E Ratio

Canadian Solar (Nasdaq: CSIQ  )

**

***

(8.2%)

8.2

Deckers Outdoor (Nasdaq: DECK  )

**

***

3.3%

14.1

OshKosh (NYSE: OSK  )

**

***

(10.9%)

2.9

Source: Motley Fool CAPS Screener; price return from July 16 to Aug. 12.

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 investors might think these companies will go on to beat the market.

Canadian Solar
Chinese solar specialist Canadian Solar was singed worse than many of its rivals as European subsidy cuts weighed on the industry. But Hanwha Chemical's decision to take a 50% take in Solarfun Power (Nasdaq: SOLF  ) indicates there might be more interest in outside companies buying their way into the business. Canadian Solar -- down 60% year to date -- might be an attractive company for someone, too, and it trades at a market multiple comparable to Solarfun.

However CAPS member iconbob thinks the oddly named Chinese solar company has a bright future ahead of it: "csiq has taken a big hit because of the Euro falling but sales are growing and going green is the newest and greatest industry for years to come."

Deckers Outdoor
Footwear manufacturer Deckers Outdoor has been on a Foolish growth spurt for years, generating copious amounts of cash and value for investors. Analysts are looking for it to transform itself into a global brand as it seeks out international opportunities, much like Nike (NYSE: NKE  ) has done.

AlbertaBorn would seem to agree, remarking that the company is much more than its iconic Ugg boot:

These guys are amazing at expanding their target market. They are so much more than Ugg boots. The sustained growth that they show now will not stop any time soon if they can maintain brand expansion, which their clever and talented design team certainly seems capable of. Low PE, low debt, high ROI and high EPS. I see no downsides.

OshKosh
Maybe Force Protection (Nasdaq: FRPT  ) lost the battle but won the war. Specialty vehicle maker OshKosh beat out Force Protection for the M-ATV defense contract, but that's apparently come at a cost to performance. Its debt ratings have been in junk territory, and while it's been driving down its debt levels, they remain below investment grade. Still credit analysts have bumped up the ratings a notch and if the vehicle maker can diversify more of its operations from the lucrative M-ATV it could see those ratings improve.

CAPS member doctinez is looking for OshKosh's defense contracts to continue to be an important component of its business going forward, though:

I still think that all of these scary numbers but they all have slowly been increasing with better results. If you break it down Oshkosh defense not only have great products on their hands, they are also saving lives overseas, thats just something you cant ignore.

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. If you agree join me there, or let us know in the comments section below whether you think these or any other stocks are starting to rev their engines.

Try any of our Foolish newsletter services today, free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.


Read/Post Comments (3) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 15, 2010, at 5:36 PM, midnightmoney wrote:

    Could somebody from the fool let us in on why the mf hasn't endorsed deckers for any of its portfolios? The numbers do look juicy, don't they?

  • Report this Comment On August 16, 2010, at 10:07 AM, MRBillsnutjob wrote:

    I still think that Oshkosh has an installed base of trucks both commercial and military to big to be ignored parts sales are even more lucrative for most company's than the original sales. Just a thought the company I work for does at least as much sales in parts as new installs but that just my observation. The profit margin on parts is way higher then initial sales.

  • Report this Comment On August 16, 2010, at 10:13 AM, MRBillsnutjob wrote:

    Another thought Oshkosh has what United States needs good paying manufacturing jobs. if we are going to lift ourselves up by our bootstraps we need to do it with USA company's FSLR WFR OSK OTT the list goes on.

    these are our home grown job producing companies not China's.

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