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 can 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 149 stocks when I ran it, no doubt reflecting the market's continued recovery, and included these recent winners:


CAPS Rating Sept. 17, 2009

CAPS Rating Dec. 17, 2009

Trailing 13-week Performance

Hershey (NYSE: HSY)




LaBranche & Co.




Newcastle Investment (NYSE: NCT)




Source: Motley Fool CAPS Screener; trailing performance from Dec. 18 to March 16.

Hershey, in fact, was previously picked as a stock ready to run just this past December. But 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 43 stocks the screen returned, here are three that are still attractively priced, but which investors think are ready to run today:


CAPS Rating Dec. 17, 2009

CAPS Rating March 16, 2010

Trailing 4-Week Performance

P/E Ratio

China Real Estate Information (Nasdaq: CRIC)





Gafisa (NYSE: GFA)





Providence Service (Nasdaq: PRSC)





Source: Motley Fool CAPS Screener; price return from Feb. 19 to March 16.

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.

China Real Estate Information
Does China face the same situation the U.S. housing market found itself in before its collapse, or are we witnessing the rebirth of the Chinese economy after a mild setback? CAPS member iddqkfyou thinks the country's current housing craze might be a bubble indeed, but is counting on China Real Estate Information to overcome such obstacles:

There may very well be a bubble, with many families owning 3-12 condos... but they are rich families, millions of millionaires. I think that China already had its big securities bust, and if that could not take down real-estate... then I fear what might. I actually hope that I make this pick and the market falls (which seems like a likely phase of the cycle now); then I will say, "What is that pick down 40%?", repick at a lower basis, and put some real money in.

If China's real estate market will grow, why not Brazil's? Homebuilder Gafisa could benefit from a resurgent Brazilian economy, as the government there continues to stimulate the housing sector. Unlike CRIC, which has just a few dozen CAPS members tuned into it, several hundred have their eye on Gafisa, and 89% of them believe it will outperform the market.

The news is far gloomier for U.S. homebuilders, though. Sales of newly built homes fell 11% in January, while previously occupied home sales dropped 7%. Although shares of builders Pulte Homes (NYSE: PHM) and Hovnanian (NYSE: HOV) are up a respective 14% and 18% year to date, they could see a reversal as poor numbers build on one another.

Providence Services
CAPS All-star LawfordCap found specialty social services provider Providence Services an interesting potential investment, despite the paucity of information available on it. The company just turned in a fourth-quarter profit on revenue that rose 21% year over year, thanks to the new business it added in New Jersey. Look for more information to find its way out to investors as contracts continue to grow.

Three for free
Are these companies still good values, 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 what you think.

It pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. Head over to the completely free CAPS service, and let us hear your thoughts on these or any other stocks just starting to rev their engines.