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 100 stocks when I ran it, no doubt reflecting the market's turmoil during that time, and included these recent winners:
|
Stock |
CAPS Rating* |
CAPS Rating* |
Trailing 13-Week |
|---|---|---|---|
| Oncothyreon |
** |
*** |
26.1% |
| Sify Technologies |
** |
*** |
56.9% |
| US Gold |
** |
*** |
25% |
Source: Motley Fool CAPS Screener; trailing performance from Dec. 31 to April 1. *Out of 5.
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 65 stocks the screen returned, here are three that are still attractively priced, but which investors think are ready to run today:
|
Stock |
CAPS Rating 1/12/11 |
CAPS Rating 4/11/11 |
Trailing 4-Week Performance |
P/E Ratio |
|---|---|---|---|---|
|
Extreme Networks |
** |
*** |
1.8% |
16.1 |
|
International Paper |
** |
*** |
7.8% |
19.6 |
|
Oplink Communications |
** |
*** |
(5%) |
19.1 |
Source: Motley Fool CAPS Screener; price return from March 4 to April 1.
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.
Extreme Networks
It's not only Extreme Networks that's feeling the effects of networking equipment order delays and tight competition. Industry giant Cisco
With 98% of the CAPS All-Stars rating the networking equipment maker to go on and beat the broad market averages, it seems the bullish sentiment has a lot of company. Put the stock on your own watchlist and let us know on the Extreme Networks CAPS page and let us know if you think it will still short circuit.
International Paper
MeadWestvaco just reported earnings last week that showed profits soaring 93% on revenues that were 5% higher. While that was slightly below what analysts were looking for, industry giant International Paper reports its own earnings at the end of the month, and analysts expect huge growth this year. More importantly, though, is IP's purchase of a majority stake in an India paper company that should drive revenues higher in one of the top growing markets.
Of the more than 400 CAPS members rating International Paper, 85% believe it will top the indexes. Paper over the International Paper CAPS page with your opinion on whether the subcontinent will lift IP above any subpar returns.
Oplink Communications
With both Oclaro
With telecom carriers still needing to upgrade their fiber optic gear to support mobile computing and the growth of 3G networks -- let alone emerging 4G -- CAPS member Tmurray5 likes the future of the industry.
See your way over to the Oplink Communications CAPS page then add it to the Fool's free portfolio tracker and see if it makes good on its promise.
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.
