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 the small-cap stock-picking service Motley Fool Hidden Gems, even in this downturn, the analysts have been able to stay ahead of the market by finding undervalued stocks that other 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 their stocks began to move up over the past three months in a market that has headed south in a dramatic fashion. My screen returned 56 stocks when I ran it and included these recent winners:

Source: Motley Fool CAPS Screener; trailing performance from Nov. 7 to Feb. 5.

While that tells us which stocks we perhaps should have looked at three months ago, what we want are the stocks we ought to be looking at today. So I went back to the screener and looked for stocks that had just been bumped up to three stars or better, that sport valuations lower than the market's average, and whose price hasn't moved up over the past month by more than 10%.

Here are three stocks out of the 58 the screen returned that are still attractively priced, but that investors think are ready to run today!

Source: Motley Fool CAPS Screener; price return from Jan. 9 to Feb. 5.

Though the results you get may be different since the data is dynamically updated in real time, you can run your own version of the screen. But let's take a look at why investors might think these companies will go on to beat the market.

Aegon
Netherlands-based insurer Aegon is looking to streamline its operations, which cover a multitude of businesses, allowing it to better compete with rivals like AXA (NYSE:AXA). As CAPS member foolergo8888 pointed out last month:

The Company's businesses focus on life insurance, pensions, savings, and investment products. The Company is also active in accident, supplemental health, general insurance and some limited banking activities.

Compuware
Business software and IT services specialist Compuware trumpeted in its press release announcing quarterly results that it "conquered" the economy, even though its revenue fell by 13% from last year. However, in this environment, that sort of slip might not be so bad after all. Considering that earnings per share rose year over year and it signed a major new contract with one of its existing customers, Compuware's results may explain why more than 84% of those CAPS members rating the firm think it will outperform the market.

Rent-A-Center
I've noticed Rent-A-Center running more TV commercials in my area these days. Certainly, a challenging economy might make low payments and a "no credit needed" policy seem like a good way to get products you might not otherwise be able to afford. CAPS member mikef444 figured last month that if nothing else, the company might be able to enjoy a boost from the Super Bowl:

In the current economy, more people are inclined to rent if they can't buy. This is good for their rental business but bad for their same-store sales...still, I think their rental numbers will be up...Super Bowl coming...

And since the Steelers won, I think that means the market itself should be going up this year! According to one version of the popular Super Bowl Effect indicator, stocks rise when a team from the National Football Conference (like the Cardinals) or one from the pre-1970 National Football League (like the Steelers) wins the Super Bowl. Of course, this year’s odds were stacked in favor of investors: Both teams met the criteria for a bull market.

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?