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


CAPS Rating 8/25/10

CAPS Rating 11/25/10

Trailing 13-Week Performance

TravelCenters of America




BioSante Pharmaceuticals




H&E Equipment Services




Source: Motley Fool CAPS Screener; trailing performance from Nov. 26 to Feb. 24.

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


CAPS Rating 11/25/10

CAPS Rating 2/24/11

Trailing 4-Week Performance

PE Ratio

Lannett (NYSE: LCI)





Sanmina-SCI (Nasdaq: SANM)





Lincoln National (NYSE: LNC)





Source: Motley Fool CAPS Screener; price return from Jan. 28 to Feb. 24.

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.

Even with the logjam at the FDA preventing any meaningful product approvals, generic drug maker Lannett was able to quadruple profits on a 4.5% increase in revenues. The sales growth appears in line with other generics manufacturers like Mylan's (NYSE: MYL) 5.7% rise. Yet Mylan still disappointed analysts, as did Teva Pharmaceuticals (Nasdaq: TEVA), which actually saw its generics sales tumble 5% in the fourth quarter.

It was last November that CAPS member stktrdr1 said Lannett was ready to take up the mantle with its new lineup in the face of a difficult market:

LCI seems to have plans for new products and marketing they look as if they will do well over the next few months holding their own while the market makes the necessasry corrections.

Put Lanett on your watchlist and see whether this is another generic opportunity to capitalize on good growth.

Analysts see the market for electronics contract manufacturers like Sanmina-SCI and Flextronics (Nasdaq: FLEX) being exceptionally bullish for the foreseeable future, which probably underscores why both are bargain priced over a couple of valuation metrics. Based on forward earnings estimates as well as on its sales, Sanmina is the cheapest in its industry, as it has expanded to penetrate additional markets like medical and industrial.

With 87% of the CAPS All-Star members rating the contract manufacturer to beat the market, you can manufacture your own opinion on the Sanmina-SCI CAPS page, and let us know if you think the industry will grow or contract.

Lincoln National
Variable annuities may make sense in your overall financial plan, but as the Fool's Dan Caplinger points out, finding the right information to make a comparison isn't always easy, and some companies impose exceptionally high fees that make them a poor choice. Lincoln National is one of the largest sellers of variable annuities, along with Prudential (NYSE: PRU), and both are some of the biggest backers of index annuities, too. That they also have an unsavory reputation is no surprise.

But as 95% of the CAPS All-Star members rating it believe it will outperform the broad market averages (and 100% of the 10 analysts following it), Lincoln National's future seems anything but variable.

Head over to the Lincoln National CAPS page and let us know how you think it stacks up against the indexes.

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 Teva Pharmaceutical Industries. 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.