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 just 143 stocks when I ran it, no doubt reflecting the market's turmoil during that time, and included these recent winners:

Source: Motley Fool CAPS screener; trailing performance from July 16 to Oct. 13.

StoneMor Partners, in fact, was previously picked as a stock ready to run in May, and represented a period when the market rose by more than 10%. 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 36 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 Sept. 17 to Oct. 13.

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.

Northern Trust
Northern Trust's policy of catering to the rich has served it well through the financial crisis. While others like U.S. Trust have been bought out by Bank of America in its quest to be an everyman for banking, independent banking giant Northern Trust has a laser-like focus on the wealthy that's permitted almost half its revenue to come from individuals with more than $1 million to invest. But with Fed chairman Ben Bernanke continuing his easy money policies, the country's low-interest rate environment may pressure earnings in the future.

CAPS member oohaeagle thinks there's a chance Northern may go the route of U.S. Trust and get bought out, but 87% of the CAPS members rating the bank expect it to continue churning out marketing-beating results.

Toyota
Even if General Motors' new Volt is as revolutionary as it claims, the PR snafu surrounding its unveiling means the Nissan Leaf seems to be the one, true consumer electric vehicle. Tesla's (Nasdaq: TSLA) Roadster and Fisker's Karma are currently aimed at the rich and famous.

While Toyota is developing a drivetrain for Tesla, in which it is a shareholder, the hullabaloo surrounding the Volt could give Toyota a chance to do something exciting with its own cars. As rpgizzle asks:

When was the last time you heard of anyone say they had to go out and have that toyota or lexus? Everyone is talking about ford, gm, benzes, bimmers, audis, and hyundais. These companies are hot. Even Honda-when was the last time you saw an exciting Honda? Nissan and Mazda make good looking cars, thats it.

You can add Toyota to your My Watchlist page and have all the Foolish news and analysis about this retailer compiled together for you in one place.

Urban Outfitters
You could almost hear the collective sigh of relief when the retail sales numbers were released and they beat expectations. Add to it inflation coming in lower than expected, and the hope is growing that the recovery won't be soon derailed. However, with food and gas excluded from the numbers because they're "volatile," the inflation index is missing an important component of every household's spending budget.

And if that budget is crimped because of it, retailers of discretionary goods like Urban Outfitters are ultimately going to feel the pinch. Retailers Wal-Mart (NYSE: WMT) and Target (NYSE: TGT) have been beneficiaries because they've been offering steep discounts to consumers, but CAPS member sr00t would probably agree that those consumers are probably a different demographic than people who shop at Urban Outfitters.

The Anthropologies line of stores is growing and steadily targeting the modern metro woman. They have recently announced that they are directly producing their own accessories which has a huge profit margin. 

Among my male friends, It's been a truth for a few years now that if you need a gift for your lady, just about anything at Anthropologie will be a win.

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.