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 141 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 Nov. 12 to Feb. 1. CAPS rating out of five stars.

Hartford Financial Services, in fact, was previously picked as a stock ready to run in November and represented a period when the market rose by 11%. 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 41 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 Jan. 14 to Feb. 11.

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.

Xcel Energy
Despite the volatility of natural gas prices last year, utility operator Xcel Energy was still able to see revenues rise almost 10% in 2010, and it was able to increase its dividend to $1.00 a share. Being able to grow the dividend is one of the reasons Duke Energy (NYSE: DUK) has proposed buying Progress Energy (NYSE: PGN) for $13.7 billion.

Ninety-two percent of the more than 330 CAPS members rating Xcel believe it will outperform the broad market averages, and it looks as though they expect it will be able to continue growing all on its own. You can add it to your watchlist and stay on top of all the Foolish news and analysis as they develop.

Amtech Systems
Amtech Systems strong quarterly earnings report was diminished by it announcing a $60 million shelf offering that investors fear will significantly dilute current owners. Instead of rising, the stock turned tail and fell 8% the day after and has continued drifting lower since. With stiff competition ahead from Applied Materials (Nasdaq: AMAT) and GT Solar, investors have pushed the stock down 12% from its recent highs.

CAPS member potsticker109 thinks Amtech is set to continue recording strong earnings because the solar sector is primed to move: "Great fundamentals, massive growth sector (solar), machine tools rather commodity (panels) provider. What's not to like?"

While a cynic might respond "dilution," you can deliver your own insights about its prospects for growth on the Amtech Systems CAPS page and let us know if you agree with this assessment.

Tri-Tech Holdings
Chinese wastewater treatment specialist Tri-Tech Holding is suffering from the fallout over the accounting irregularities at industry rivals RINO International, which ultimately got delisted, and Duoyuan Global Water.

While Chinese small-cap stocks are a virtual minefield these days, it's hard to argue with the need for wastewater treatment specialists in the country, and CAPS member HollowMountain says Tri-Tech will survive this rocky period.

Recently, this has been oversold, and a bounce is due. Especially when looking at it's business sector -- it works with both waste and water in China, two things that at the very least will prove profitable.

Don't waste a minute. Head over to the Tri-Tech Holding CAPS page and treat us to your insights on what the future holds for the company.

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.