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


CAPS Rating 9/07/10

CAPS Rating 12/07/10

Trailing 13-week Performance

Samson Oil & Gas * *** 248.7%
Fabrinet ** *** 70.3%
Timberland ** *** 56.1%

Source: Motley Fool CAPS Screener; trailing performance from Dec. 7, 2010 to March 7, 2011.

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


CAPS Rating 12/07/10

CAPS Rating 4/04/11


4-Week Performance

PE Ratio

JPMorgan Chase (NYSE: JPM) ** *** 2.1% 11.5
Magic Software Enterprises (Nasdaq: MGIC) ** *** (26.3%) 23.1
CNinsure (Nasdaq: CISG) ** *** (7.6%) 13.5

Source: Motley Fool CAPS Screener; price return from Feb. 4 to March 4.

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.

JPMorgan Chase
Over the 20-plus years that JPMorgan Chase held the deposits of convicted swindler Bernie Madoff, it made nearly a billion dollars in pre-tax profits. The Ponzi schemer himself says the banks and his largest clients knew what he was up to, and the trustee suing anyone who might have profited from the scam is going after JPMorgan to the tune of $6.4 billion. Citigroup (NYSE: C) is being targeted for $425 million, and Bank of America (NYSE: BAC) for $16 million.

While it's tempting to think that Madoff's statements are self-serving, there are apparently emails circulating suggesting that the bankers questioned how he could be so successful for so long. Whether there's a smoking gun to implicate anyone else remains to be seen. Still, more than 85% of those rating JPMorgan Cahse on CAPS think it will outperform the broad market averages. CAPS member BlazerMania says the bank's success will be just as much about chairman Jamie Dimon as about the bank itself.

Put JPMorgan Chase on your watchlist, and see whether the biggest Ponzi scheme ever takes down more players still.

Magic Software Enterprises
Building on its position as an IBM (NYSE: IBM) software partner, Magic Software Enterprise's uniPaaS and iBOLT platforms allows businesses to rapidly customize and integrate applications into existing systems. Alas, the market didn't seem to like its quarterly results, which showed revenue soaring 73% over the year-ago period, and operating profits nearly doubling when you exclude the one-time gain it recorded last year.

EclecticRecluse thinks the pullback in the stock is over now, and believes that those kinds of impressive numbers should set the stage for the next leg of its move up. Let us know on the Magic Software Enterprises CAPS page whether it will be bolting on any additional profits in the future.

Similar to Magic, Chinese insurer CNinsure reported what looked like strong quarterly earnings results, but the market absolutely hated them. In comparison, Aon (NYSE: AON), the world's biggest insurance brokerage, reported strong results that helped push its stock 7% higher over the past month.

Perhaps there's a reason for the market's disappointment. Although CNinsure's revenue soared year over year, the company missed estimates, and expenses rose even higher. Even worse for shareholders, executive compensation outstripped everything, quadrupling over the past year -- despite the stock's incredibly poor performance. Investors apparently don't appreciate how unevenly management has shared the company's burder.

Nonetheless, the Chinese insurer sports noteworthy metrics that make the possibility of a rebound seem likely. With 90% of the CAPS members rating it believing it will outperform the broad market averages, CNinsure could be facing a brighter future.

Head over to the CNinsure 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, 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.