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 16 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 April 23 to July 19.

Coinstar, in fact, was previously picked as a stock ready to run in February. 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 58 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 June 25 to July 19.

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.

Goldman Sachs
There's an old Hank Williams song titled, "You Win Again," which seems to describe how Goldman Sachs always manages to come out on top and generate uncivil thoughts. Sure, it just had to pay a $550 million fine to the SEC to settle the fraud charges leveled against it, and the U.K. swiped $600 million as a tax on executive bonuses. While its profits were 82% lower as a result, the investment banking house -- along with Citigroup (NYSE: C), JPMorgan Chase, and other big financial institutions -- escaped a much worse fate.

As highly rated CAPS All-Star leohaas suggests, you simply can't keep Goldman Sachs down:

The basis reasons for picking GS still remain: GS's price was depressed due to the SEC investigation and the threat of financial regulations. I'm not convinced the SEC will find anything. And the final version of the regulation is a lot weaker than what it could (should?) have been. Bottom line: if you cannot beat them, join them!

National Semiconductor
When Intel (Nasdaq: INTC) led the market higher by posting better-than-expected earnings, it raised hopes that the rest of the tech sector, including other chipmakers like National Semiconductor, would follow in its big footsteps. National Semi certainly felt strong enough to raise its dividend by 25%, from $0.08 to $0.10 per share.

CAPS members think National Semi is a chip off the old block; 86% of those rating the tech giant believe it will beat the broad market averages. Let us know on the National Semiconductor CAPS page whether its earnings will show strong returns, or if the gains that Texas Instruments (NYSE: TXN) has been recording will erode its share.

True Religion Apparel
True Religion Apparel says international sales of its high-priced jeans grew 22% in the first quarter; the company expects that foreign revenue will eventually exceed domestic sales. While 87% of CAPS members rating the jeans maker like its chances of beating the market, adamflinn just finds it hard to reconcile growing sales with a recession:

I like everything about this stock except the final products prospects. To me it is a gamble that will pay off if you think more people (mainly in the US) are willing to spend big bucks on jeans during real or perceived difficult times.

Three for free
Are these companies still good values, 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 box below whether you think these or any other stocks are starting to rev their engines.