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


CAPS Rating 8/20/10

CAPS Rating 11/22/10

Trailing 13-Week Performance





Pinnacle Financial








Source: Motley Fool CAPS Screener; trailing performance from Nov. 19 to Feb. 18.

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 37 stocks the screen returned, here are three that are still attractively priced, but which investors think are ready to run today:


CAPS Rating 11/22/10

CAPS Rating 2/18/11

Trailing 4-Week Performance

PE Ratio

Cray (Nasdaq: CRAY)





Washington Federal (Nasdaq: WFSL)





Ingles Markets (Nasdaq: IMKTA)





Source: Motley Fool CAPS Screener; price return from Jan. 21 to Feb. 18.

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.

Despite handily beating analyst expectations for both the fourth quarter and the full fiscal year, shares of supercomputer maker Cray are still trading lower. This could be a large miscalculation as Cray's new XMT supercomputers, powered by Taiwan Semiconductor Manufacturing (NYSE: TSM) processors, are part of its growing custom engineering business. Although it only generated $62 million in 2010, the CE line is expected to generate $100 million in business soon enough. As a matter of fact, it just sold one of the next-gen computers to the Swiss National Supercomputer Centre.

As 83% of the CAPS members rating Cray believe it will outperform the broad market averages, it looks as though they expect it will be able to continue growing all on its own. If it all adds up for you, put Cray in your watchlist and stay on top of all the Foolish news and analysis it develops.

Washington Federal
No doubt Washington Federal's significant exposure to real estate will weigh heavily on it, as Hudson City Bancorp (Nasdaq: HCBK) recently said it's expecting high unemployment numbers, and the precarious financial straits of Fannie Mae will leave the markets in uncertainty.

However, Washington Federal has been working to shore up its own financial condition, and last quarter profits grew while non-performing assets shrunk. The ennui related to housing was evident in the bank's increasing its loan loss reserves despite nonperforming assets as a percentage of total assets declining.

Although just two-thirds of the CAPS members rating the financial institution think it will beat the market, 88% of the All-Stars do. You can deposit your thoughts on the Washington Federal CAPS page, and let us know if you agree that banking on an improved economy is enough.

Ingles Markets
Unless you live in the southeast, you might not have heard of Ingles Markets, a chain of grocery stores throughout Georgia, North Carolina, South Carolina, Tennessee, Virginia, and Alabama. Yet this relatively small supermarket (it has a little more than 200 stores) has been beating out its better known and presumably more financially secure rivals like Kroger (NYSE: KR) and Safeway (NYSE: SWY). Indeed, over the past year where Kroger has eked out a 6% gain in its shares and Safeway dropped 4%, Ingles soared 45%. In its first fiscal quarter, sales were up 4% but profits soared 28% and comps were 3% higher.

CAPS All-Star member RXDOC73 appreciates the tidy dividend it pays, which current yields 3.3%, but that would just put him in good stead with all the All-Stars rating the grocery store chain who unanimously believe it will continue to perform ahead of its rivals.

Head over to the express checkout lane on the Inlges Markets CAPS page and ring up the reasons why you might disagree with their assessment.

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.

Timberland is a Motley Fool Stock Advisor recommendation. The Fool owns shares of Timberland. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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.