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. Even in this market, the analysts at our small-cap investment service Motley Fool Hidden Gems 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 129 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 Jan. 8 to April 6.

Boise, in fact, was previously picked as a stock ready to run just this past 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 48 stocks the screen returned, here are three that are still attractively priced, but that investors think are ready to run today:

Source: Motley Fool CAPS Screener; price return from March 12 to April 6.

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.

Limited Brands
The retail industry has bounced back as consumers found their wallets again, and Limited Brands is trying to entice investors with new share buybacks, a special dividend, and lower debt levels. But not all analysts think the Victoria's Secret owner is a well-kept secret these days, saying the debt load is still a burden and there's been no revenue growth to encourage hope.

Still, 83% of the CAPS members rating the mall-based retailer think it will be able to outperform the broad market averages; you've got an unlimited amount of time to add your opinion on the Limited Brands CAPS page.

NutriSystem
Advertising costs socked weight-loss expert NutriSystem this past quarter, and sales from its partners were rather thin. However, it expects ad costs to decline in the quarters ahead since they tend to be higher earlier in the year. It's not alone, though, as the recession also tipped the scales against rival Weight Watchers International, which gave a gloomy forecast for the rest of the year, too.

CAPS member ShadowEquities admits NutriSystem was beaten up by the recession, but is still standing and will still be able to fatten up the bottom line in the future:

Battered by the economy, but good model and product. It survived a tough time and is geared for more growth.

Qwest Communications
Cashing in on its ability to generate copious amounts of free cash flow, Qwest Communications is quickly heating up to become an investor favorite. CAPS member Hellacious13 says its partnership with Verizon (NYSE: VZ) to build out the nation's first 4G LTE network using Qwest's backhaul equipment is only the latest step in its growth plans:

High volume of big guns are trading Q! It got past its 1st hurdle of achieving a 5 buck stock and is now poised to soar even higher! Q recently helped Verizon wireless build the very 1st 4G LTE Network in Western U.S.

Dial up the telecom equipment leader on the Qwest Communications CAPS page and tell us whether you think the call will go through.

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.