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 market, the analysts are able to stay ahead of the market 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 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 155 stocks when I ran it and included these recent winners:

Source: Motley Fool CAPS Screener; trailing performance from March 6 to June 1.

BCE was, in fact, previously picked as a stock ready to run and was featured here in December. So while this screen might tell us which stocks we should have looked at three months ago, what we want are 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, sporting valuations lower than the market's average, and whose price hasn't moved up over the past four weeks by more than 10%.

Here are three stocks out of the 47 the screen returned that are still attractively priced but which investors think are ready to run today!

Source: Motley Fool CAPS Screener; price return from May 8 to June 1.

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

Edenor
Shares of Argentinean electricity generator Edenor fell late last year, when Argentina's president announced plans to nationalize $30 billion in assets held by local, private pension funds. But revenues and net income rose in the latest quarter, as increased rates have more than offset somewhat lower usage. That has given the stock a little jolt of energy with shares rising by more than 50% over the past three months. Investors can follow stocks with the Argentina and Electric Utilities tags over in CAPS, where Edenor, though down by nearly 70% over the past year, is one of the top-rated stocks in both categories.

KB Financial
Some investors fear the saber-rattling North Korea is currently engaged in is going to have a negative impact on South Korean firms like KB Financial, also known as Kookmin Bank. The company has also had to deal with weaker earnings, as asset deterioration from the global recession weighed on results. CAPS member JackCaps says the North's nuclear missile tests would be a damper on anyone's day regardless.

North Korea's successful nuclear test is apt to dampen sentiment toward South Korean stocks, including KB.

Valmont Industries
Water, water everywhere -- but we need some way to make the most of it. Step into Valmont Industries, which along with competitor Lindsay (NYSE:LNN) controls more than two-thirds of the market for efficient irrigation equipment, according to BusinessWeek. CAPS member jrj90620 is looking for Valmont to profit from the greater need for water conservation along with electricity growth.

This is a company that has achieved No. 1 positions in mechanized irrigation and poles. It has opened 3 factories in China and has been profitable in China.The company benefits from need for water conservation, electricity growth and need for more transmission structures. Likely will be acquired by a larger company in the future because it is such a great company and because the founder still owns a third of shares and likely won't live forever.

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.