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
EPS Growth

CAPS Rating
(out of 5)

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:

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.

Bryan White owns shares of Middleby. Middleby and Zumiez are Hidden Gems picks. VASCO is a  Stock Advisor pick. The Motley Fool has the best disclosure policy in the biz.