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, analysts are able to stay ahead of the pack even in this market 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 113 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 Nov. 6 to Jan. 5.

STEC, in fact, was previously picked as a stock ready to run just this past November. 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 64 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 Jan. 8 to Feb. 5.

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.

Advanced Battery Technologies
Rumors of a possible deal with Apple (NASDAQ:AAPL) to supply its new tablet computer with lithium ion batteries helped generate a surge of enthusiasm in Advanced Battery Technologies, but without anything more to go on, the stock has slid in recent weeks. However, even without that contract, CAPS member bornbully thinks there will still be more li-ion power packs in our future.

more powerful Batteries in our growing reliance on our devices to deliver our information to us where ever we are. In conjunction with solar energy in then near future, I also see new Battery tech being used in our homes to store energy. I'm betting ABAT will have a presence in that market in the future. Long.

Discover Financial Services
With more than 50 million cardholders, Discover Financial Services is the fourth-largest credit card company in the U.S., but it has less exposure to California, Florida, and Nevada (where the housing crisis hit particularly hard) than the other major players. Profits rose 22% to $1.3 billion last year, and business is so good that the company even expects to repay its TARP loans.

CAPS members are bullish on Discover; more than 80% of those rating the credit card issuer believe it will outperform the broad market averages. Share your opinion on the Discover Financial Services CAPS page.

VeriSign
As CAPS member baselineace pointed out last November, "Without VeriSign, there is NO Internet." All those .com domain names you see are operated by VeriSign, which will launch a 25th anniversary celebration next month. Where did all the time go?

While the company missed earnings estimates, revenues rose 6% over last year. And 86% of CAPS members rating the Internet infrastructure provider believe it will outperform the market. You can add your opinion on the VeriSign CAPS page.

Three for free
Are these companies still a good value? Are they 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 what you think in the comment box below.

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?