3 Stocks Ready to Roar

There are plenty of strategies for picking stock winners: low P/E stocks, companies selling at a discount to their future cash flows, and more. At our small-cap stock-picking service, Motley Fool Hidden Gems, even in this market, the analysts are beating the market by 14% -- by finding undervalued stocks that the market and investors have ignored.

Yet what if we could find a way to whittle down our list of prospects beforehand, finding those whose engines are just getting warmed up?

Using the investor-intelligence database of Motley Fool CAPS, I screened for stocks that were marked up by investors before they began a run-up of 15% or more over the past three months. That underscores the research suggesting that CAPS' highest-rated stocks performed best, while its lowest-rated companies fared worst.

My screen returned six stocks when I ran it last week, including these recent winners:

Source: Motley Fool CAPS screener; price return from July 11 close to Oct. 10 close.

While that tells us which stocks we perhaps should have looked at three months ago, what we want are the stocks that we ought to be looking at today. So I went back to the screener and looked for stocks that just bumped up to three stars or better, sport valuations lower than the market's average, and whose price hasn't moved up over the past month by more than 15%.

Here are three stocks the screen returned last week that are still attractively priced but which investors think are ready to run today!

Source: Motley Fool CAPS Screener; price return from Sept. 12 close to Oct. 8 close.

Let's take a look at why investors might think some of these companies will go on to beat the market.

Ameriprise Financial
It's the old good news-bad news story with Ameriprise Financial. It announced it's going to suffer some meaty losses from its exposure to Lehman Brothers and Washington Mutual, as well as its decision to help investors recover their money from Primary Reserve, whose money market mutual fund "broke the buck." Yet with $4 billion in cash on its balance sheet, Ameriprise likely won't be impeded by the credit freeze on Wall Street. CAPS member halindrome figures that investors are going to be looking for investment guidance from the likes of Ameriprise: "With a P/E ratio of about 7, this stock is seriously undervalued. In these scary financial times, people are going to need more and more financial advice. And Ameriprise is there to give it to them."

Fisher Communications
It flies under the radar of Wall Street, but Fisher Communications is in the sights of legendary investor Mario Gabelli. He notified the media and communications firm that he may seek a seat on its board of directors, a move he's made with a number of other companies, including Cablevision (NYSE:CVC). Fisher pretty much flies under the radar of most CAPS members, too, though nearly three-quarters of those who have rated the firm think it will outperform the market. Back in January, CAPS member TritiumAE felt that the company was making good acquisitions:

Fisher Communications seems to have most of their ducks in a row. They continue to acquire stations around the country. I wish all stations would limit paid programming to night time, or their alternative channels can show the program. Also, this is a good time to buy in.. 'tis the season...

Safeway
Stealing a page from Kroger (NYSE:KR) and Wal-Mart (NYSE:WMT), supermarket chain Safeway posted a 2.6% increase in profits this quarter by offering shoppers lower prices regularly. While gasoline sales provided much of the boost, making a trip to Safeway more of a value-oriented experience helped too. CAPS member jgseattle finds Safeway a good play in a coming recession: "defensive, even in recession people need to purchase food. This is a good position to open with a good p/e and good operations."

Three for free
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?

In the coming weeks, Fool co-founder David Gardner and his Motley Fool Pro team will invest $1 million in a portfolio designed to help you make money in any market. The service, which just launched, will rely heavily on proprietary CAPS "community intelligence" data to establish long and short positions in a broad range of securities, including common stocks, publicly traded put and call options, and exchange-traded funds. To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.