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 is currently beating the market by 15 points with its recommendations of small-cap companies that hadn't yet registered on Wall Street's radar -- like Middleby (NASDAQ:MIDD), up an average of 169% over the course of its several recommendations.
With that example 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 EPS 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 20 months after the launch of CAPS in 2006, five-star stocks like Ceradyne (NASDAQ:CRDN) outperformed all other categories, climbing at an average annual rate of 12%.
Here are five of the companies I found with that screen:
|
Company |
Share Price |
Sector |
Trailing-3-Year |
CAPS Rating |
|---|---|---|---|---|
|
MGE Energy (NYSE:MGEE) |
$33.61 |
Utilities |
36.9% |
***** |
|
PetMed Express (NASDAQ:PETS) |
$13.62 |
Health Care |
24.25% |
***** |
|
TradeStation (NASDAQ:TRAD) |
$7.95 |
Financial |
25.25% |
**** |
|
VASCO Data Security (NASDAQ:VDSI) |
$7.21 |
Technology |
52.22% |
***** |
|
Zumiez (NASDAQ:ZUMZ) |
$14.55 |
Services |
29.24% |
**** |
Data from Motley Fool CAPS as of Oct. 8.
Remember, a screen serves as a first step to finding great investments, which you should follow with your own due diligence. Come and join us on Motley Fool CAPS to dig into these companies further. Our 115,000-person-strong (and counting) CAPS community can help you stay a step ahead.
More CAPS content:
- The Next Stocks You Should Buy
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- The Best Company I've Ever Seen
- The Wall Street Panic of 2008
On Oct. 7, 2008, Fool co-founder David Gardner and his Motley Fool Pro team invested $1 million in a portfolio designed to help you make money in any market. In the coming weeks, the team, relying heavily on proprietary CAPS "community intelligence" data, will establish long and short positions in a broad range of securities, including common stocks, publicly traded put and call options, and exchange-traded funds. To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.
