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 investment 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. My screen returned 35 stocks, no doubt reflecting the market's continued recovery during that time, and included these recent winners:

Source: Motley Fool CAPS Screener.
Trailing performance from April 1 to July 2. CAPS rating = out of five.

NutriSystem, in fact, was previously picked as a stock ready to run in April. That 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. So 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 65 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 June 4 to July 2. CAPS rating = out of five.

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.

Advanced Battery Technologies
The hoopla over the IPO of electric-car maker Tesla Motors, the first initial public offering by a U.S. car manufacturer in 54 years, brings back into focus the companies who make the batteries that allow the vehicles to shine. Advanced Battery Technologies isn't Tesla's supplier for the Model S that will be produced with the funds raised from the IPO (that distinction goes to Panasonic), but it should get a boost from the interest the IPO created, as should other battery makers like Ener1 (NYSE: HEV) and A123 Systems.

Highly rated CAPS All-Star mrindependent thinks Advanced Battery has jump-started the competition:

Advanced Battery Technologies appears to be well situated for the future (see hall9999 pitch for all star portfolio). Unlike many other battery power start-up companies, Advanced Battery Technologies is profitable and growing.

Home Depot
The most recent housing numbers have to be a little disconcerting to do-it-yourself centers Home Depot and Lowe's (NYSE: LOW). According to the National Association of Realtors, pending home sales plunged a stomach-churning 30% in May as the tax credits for first-time homebuyers expired, revealing the true state of the industry. The NAR index fell from 110.9 in April to 77.6 in May; it's also 16% lower than where it was last year, not exactly a robust period for housing.

CAPS member tmcpa remains hopeful nonetheless, believing if people are staying put then they're going to want to fix up what they've got:

Stock is depressed due to home sale slump, however, if people aren't moving, they will be remodeling/improving. Profits should increase faster than s&p average over the next year.

Aetna
Investors might be getting nervous that if states bring closer scrutiny to rates charged by health insurers -- like what happened in California in the wake of WellPoint's (NYSE: WLP) decision to raise rates -- others like Aetna could feel the pinch. Right now, however, investors haven't abandoned Aetna, with 90% of those rating it on CAPS thinking it will outperform the broad market averages. Even more telling, 94% of the All-Stars weighing in on the insurer see it going on to beat the market.

Add a healthy dose of your own opinion on the Aetna CAPS page.

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.