Warren Buffett made billions buying undervalued companies before market sentiment swung back in their favor. Legendary sandalwood bandit (and handlebar-mustache-wearer extraordinaire) Veerappan made his personal fortune by staying one step ahead of the law. And our Motley Fool Hidden Gems newsletter service is currently beating the market by 20 points with its recommendations of small-cap companies that hadn't yet registered on Wall Street's radar -- like Buffalo Wild Wings (NASDAQ:BWLD), up an average of 171% over its several picks.

With that example in mind, I used our new CAPS screening tool to find the stocks poised for big gains -- before Wall Street catches on.

These companies have:

  • Trailing three-year EPS growth of at least 10%.
  • Market capitalizations of at least $200 million and no more than $10 billion.
  • Four- or five-star ratings in CAPS, up from one, two, or three stars at the beginning of 2008.

Remember, since the launch of CAPS in 2006, five-star stocks such as Petrobras (NYSE:PBR), up 21% in the past year, outperformed all other categories, to yield 12% on average.

Here are some of the companies I found:


Share Price


Trailing 3-Year EPS Growth

CAPS Rating

Anthracite Capital (NYSE:AHR)










Coach (NYSE:COH)


Consumer Goods



Dick's Sporting Goods (NYSE:DKS)





Quicksilver Resources (NYSE:KWK)


Basic Materials



Data from Motley Fool CAPS as of Sept. 26.

Remember, a screen serves as a first step to finding great investments that you should follow with your own due diligence. Come and join us on Motley Fool CAPS to dig into these companies further. Our 115,000-person-strong (and counting) CAPS community can help you stay a step ahead.

For more CAPS content:

On Oct. 7, 2008, 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. In the coming weeks, the team, relying heavily on proprietary CAPS "community intelligence" data, will 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.

Bryan White doesn't own shares in any company mentioned. Buffalo Wild Wings is a Motley Fool Hidden Gems pick. Petrobras is an Income Investor recommendation. Coach and Biogen Idec are  Stock Advisor picks. The Fool owns shares of Buffalo Wild Wings. The Motley Fool has the best disclosure policy in the biz.