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 90 stocks when I ran it, no doubt reflecting the market's turmoil during that time, and included these recent winners:

Source: Motley Fool CAPS Screener; trailing performance from June 11 to Sept. 8.

Ford, in fact, was picked as a stock ready to run in June, representing a period when the market fell by almost 1%. 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 had just been 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 59 stocks the screen returned, here are three that are still attractively priced, but which investors think are ready to run today:

Source: Motley Fool CAPS Screener; price return from Aug. 13 to Sept. 8.

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.

China TransInfo Technology
Where a traffic jam can stretch for 60 miles and last for weeks (and you thought your commute was bad), you understand the potential investors see in China TransInfo Technology, which provides transportation information services and commuter traffic media. With revenues growing significantly year over year, it trades at just 10 times trailing earnings and a minuscule six times the profits projected for 2011.

CAPS member nathanjohnson says the opportunity is that in China, people are on the move.

It's China-land of a million people that are in a car, taxi, rickshaw, etc at some point ... how can you go wrong?

Integrys Energy Group
Electric utility and natural gas company Integrys Energy Group has focused on running its regulated business and getting out of or downsizing those parts of its business that were unregulated. Pepco Holdings (NYSE: POM) recently disposed of its competitive energy generation, marketing, and supply business, selling it to Calpine (NYSE: CPN) for more than $1.5 billion.

In June, Integrys sold off its Texas retail electric marketing operations and focused on its regulated utility portfolio. That led to second-quarter earnings coming in well ahead of analyst expectations and last year's effort, despite lower volumes in its natural gas segment because of warmer weather.

On CAPS, 87% of the members rating the utility pick it to outperform the broad averages. Head over to the Integrys Energy Group CAPS page and let us know what you think.

Tuesday Morning
In these lean times, Tuesday Morning, an outlet for household goods, is finding an opportunity to grab some fat profits. Revenues rose 6% year over year, and customer traffic and same-store sales increased by a like amount. That would compare favorably with Bed Bath & Beyond's (NYSE: BBBY) own recovery. CAPS member bdescent believes Tuesday Morning offers value many consumers won't pass up.

People like the perceived good deals and in this economy stores and people alike are trying to get ahead. Go to Tues AM and watch them load those carts.

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.