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 134 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 Oct. 15 to Jan. 11. CAPS rating is out of five stars.

Amedisys, in fact, was previously picked as a stock ready to run in October, and represented a period when the market rose by 8%. 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 45 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 Dec. 17 to Jan. 11. CAPS rating is out of five stars.

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.

Aetna
After years of mismanagement in the statehouse, California has become a financial basket case, and residents are reeling from the government having to close a $25 billion deficit. State employees might even -- horrors! -- have their state-issued cell phones taken away. The cost of doing business in the state keeps escalating, and that includes the cost of insuring people there. Aetna, WellPoint's (NYSE: WLP) Anthem Blue Cross, and PacifiCare have all submitted large rate increase requests to the state insurance commissioner.

WellPoint earned the ire of the commissioner and the public last year when it submitted rate increase requests that were apparently riddled with errors. But insurers have to contend with the risks they're asked to cover, and rate increases, even in times of difficulty, are often necessary.

With 92% of those rating Aetna's stock in CAPS marking it to outperform the market, they're expecting the insurer to weather any storms just fine. You can add it to your watchlist and stay on top of all the Foolish news and analysis as they develop.

Air Transport Services Group
Over the past year, as the S&P 500 rose 11%, the CAPS Freight Services sector has doubled those gains, as positive results from Air Transport Service Group helped its stock triple in value. Pacer International also doubled and Expeditors International (Nasdaq: EXPD) grew 57%.

With Air Transport having led the way higher, 87% of those rating the freighter see it soaring higher still. Let us know on the Air Transport Service Group CAPS page whether you agree it can still take wing.

Ruddick
Grocery store chain Ruddick also had a pretty good 2010, though its stock is down a few percentage points in 2011. Its Harris Teeter stores, which account for 93% of revenues, saw sales jump 14% in the fourth quarter as it expanded the number of stores operating, but comps were relatively flat. That's not surprising, since grocery stores in general have been laggards in this economy, and even Kroger (NYSE: KR) had to rein in guidance as margins slid.

Ruddick has flown beneath the radar of much of the CAPS community, with fewer than 100 members weighing in on its prospects. But of those that did, 82% believe it will go on to beat the Street. That's quite possible, since it has posted six straight quarters of surprising earnings and raised its dividend for the first time since 2007.

You can add the grocery chain to the Fool's free portfolio tracker, then shop for additional insights on the Ruddick 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.