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:


CAPS Rating April 22, 2010

CAPS Rating July 22, 2010


13-week Performance

Advance Auto Parts




Alexco Resource




Cleveland BioLabs




Source: Motley Fool CAPS Screener; trailing performance from July 23 to Oct. 21.

Advance Auto Parts, in fact, was previously picked as a stock ready to run in June, and represented a period when the market rose by more than 7%. 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 49 stocks the screen returned, here are three that are still attractively priced, but which investors think are ready to run today:


CAPS Rating July 22, 2009

CAPS Rating Oct. 22, 2010


4-Week Performance

P/E Ratio

Amedisys (Nasdaq: AMED)





Dollar Tree (Nasdaq: DLTR)





Sanmina-SCI (Nasdaq: SANM)





Source: Motley Fool CAPS Screener; price return from Sept. 24 to Oct. 21.

You can run your own version of this screen over on CAPS; just remember that the data are 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.

With the Justice Department investigating the billing practices of Amedisys, and the Securities and Exchange Commission launching a similar probe into the home health services industry, it's difficult to muster much enthusiasm for Amedisys, Almost Family, or LHC Group (Nasdaq: LHCG).

Yet much of the industry trades at market multiples that are in the single digits, and when you compare them to their growth prospects, they look undervalued. Of course, any growth is predicated on a successful outcome from the inquiries, and their ability to gain contracts remains intact. Yet CAPS member kleyau says the pricing of Amedisys is as if it's going out of business, which he doesn't think likely.

Same reason as when I bought BP in June, priced like it's going bankrupt. Institutional buyers can't risk it, on the small chance they might be wrong, but I can. I'll update if I play it with rm.

Dollar Tree
Getting the most bang for your buck at Dollar Tree, Family Dollar (NYSE: FDO), and Dollar General has been one of the prime motivators for consumers shopping there. Although a lot of local dollar stores are piled floor to ceiling with ... stuff ... the dollar chains actually have clean aisles, clear displays, and a variety of products, sometimes in price ranges that belie the store names.

investinggenius says Dollar Tree has kept true to the $1 limit for the most part, and it will continue to benefit from the trend toward "frugal chic."

Dollar Tree's commitment to keeping prices low and stocking only items a dollar or less in its stores resonates with people struggling during this depression. It seems safe to say that this stock is a fair bet as benefiting from the recession and the frugal chic that's popular now may help it once the recession ends.

Contract manufacturing specialist Sanmina-SCI is likely to benefit from being able to penetrate additional markets like medical and industrial, say analysts, though there's likely to be a hit to margins. Going along for the ride would be industry peers Jabil (NYSE: JBL) and Flextronics (Nasdaq: FLEX).

You won't get much of an argument from the CAPS community where more than three-quarters of those rating Sanmina believe it will outperform the broad market averages. If you haven't already, be sure to put your tickers into's free portfolio tracker, My Watchlist. You can get started right away by clicking here to add Sanmina-SCI.

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.

The Fool owns shares of Almost Family. Try any of our Foolish newsletter services free for 30 days

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.