Warren Buffett made billions buying undervalued companies before market sentiment swung back in their favor. Legendary sandalwood bandit and handlebar-mustache-wearer extraordinaire Veerappan made his personal fortune by staying one step ahead of the law. And our Motley Fool Hidden Gems newsletter, headed by Fool co-founder Tom Gardner, is currently beating the market by 18 points with its recommendations of small-cap companies that hadn't yet registered on Wall Street's radar -- like Nuance Communications
With these examples in mind, I used our new CAPS screening tool to find the stocks poised for big gains -- before Wall Street catches on.
These companies have:
- Trailing three-year earnings growth of at least 10%.
- Market capitalizations of at least $200 million and no more than $10 billion.
- Four- or five-star ratings in CAPS, up from one, two, or three stars at the beginning of 2008.
Remember, in the first year for which we have data, newly-minted four-star stocks like Intuitive Surgical
Here are some of the companies I found:
|
Company |
Share Price |
Sector |
Market Cap |
|---|---|---|---|
|
Allscripts Healthcare Solutions |
$13.17 |
Services |
$745 million |
|
Anthracite Capital |
$6.42 |
Financial |
$454 million |
|
Citizens Communications |
$11.50 |
Technology |
$3.7 billion |
|
Gushan Environmental Energy |
$12.17 |
Basic Materials |
$1 billion |
|
Quicksilver Resources |
$33.90 |
Basic Materials |
$5.4 billion |
Data from Motley Fool CAPS and Yahoo! Finance as of July 16.
Come and join us on Motley Fool CAPS to dig into these companies further. Our 110,000-person-strong (and counting) CAPS community can help you stay a step ahead.
Or, if you'd like to check out the official list of Hidden Gems recommendations that have been crushing the market (along with our rationale for each pick), click here for a free 30-day trial.
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