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. At the small-cap stock-picking service Motley Fool Hidden Gems, even in this market, the analysts 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. (The market as a whole climbed sharply, then traded sideways, during that same period.) My screen returned 77 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 Aug.2 to Nov. 2.

Sunstone Hotel Investors, in fact, was previously picked as a stock ready to run in July. 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 51 stocks the screen returned, here are three that are still attractively priced, but which investors think are ready to run today:

Source: Motley Fool CAPS Screener; price return from Oct. 9 to Nov. 2.

You can run your own version of this screen; 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.

Huron Consulting Group
The accounting scandal miring Huron Consulting has set this stock back, even as a hedge fund's decision to unwind its shares in Huron has kept it from moving further ahead. However, investors remain upbeat about the new management team's ability to turn things around; 93% of the CAPS members rating the business consulting shop believe it will outperform the broader market averages. The stock has already rebounded from the worst of its post-scandal fall. FoolishJLH says that Huron will benefit from its "Great services; high demand," which hopefully will continue to lead the stock back up.

MetroPCS
Might we be witnessing the death of the hated two-year wireless contract? We can only hope. T-Mobile responded to MetroPCS stealing customers by offering its own no-contract service. MetroPCS still has churn issues to contend with, because the big boys are starting to match its competitive service plans. While subscriber growth fell significantly last quarter, CAPS member rachisme73 feels that the industry leader in no-contract service will continue to advance:

In an unstable market we will see more and more people select cell phone companies with no contract. This company offers continuous service w/monthly bill (not prepaid) but no penalty for canceling if life changes

Tessera Technologies
Chipmaker Tessera Technologies appears geared for growth as the International Trade Commission (ITC) reviews whether DRAM chipmakers have infringed on its patents, with a ruling expected by year's end. Qualcomm (NASDAQ:QCOM), Freescale, and Spansion had their chips previously blocked from importation because of an ITC ruling that they infringed on Tessera's patents. Now, the memory chip action could impact some of the biggest names in the industry, like Elpida Memory, Kingston Technology, and Acer. Others, like Intel (NASDAQ:INTC), already pay Tessera royalties.

Although it's fallen from its highs, 89% of the 352 CAPS members rating Tessera Technologies expect it to outperform the market.

Three for free
Are these companies still good values, ready to make their moves? I'm heading over to CAPS to mark them to outperform the broader averages. If you agree, join me there, or let us know what you think in the comments section below.

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 starting to rev their engines?