3 Stocks Ready to Roar

There are plenty of strategies for picking stock winners: For example, you can look for low-P/E stocks, or you can seek out companies selling at a discount to their future cash flows. At the small-cap stock-picking service Motley Fool Hidden Gems, our analysts are able to stay ahead of the market -- even in the current environment -- by finding undervalued stocks that have gone ignored.

Yet what if we could find a way to whittle down our list of prospects beforehand and find those whose engines are just getting warmed up?

Using the investor-intelligence database of Motley Fool CAPS, I screened for stocks that were marked up by investors before their stocks began to move up over the past three months, in a market that has headed south in a dramatic fashion. My screen returned 93 stocks when I ran it and included these recent winners:

Stock	CAPS Rating 1/7/09 (Out of 5)	CAPS Rating 4/7/09	Trailing- 13-Week Performance
Cell Therapeutics (Nasdaq: CTIC)	**	***	284.2%
Isilon Systems (Nasdaq: ISLN)	**	***	73.2%
Jackson Hewitt Tax Service (NYSE: JTX)	**	***	4.4%

Source: Motley Fool CAPS screener; trailing performance from April 9 to July 7.

Jackson Hewitt, in fact, was previously picked as a stock ready to run, and I featured it in October. So while the screen above tells us which stocks we should have looked at three months ago, it would be more helpful to see  the stocks  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, that boast attractive valuations, and that sport a price increase of more than 10% over the past month. 

Here are three out of the 41 possible stocks that investors in the CAPS community seem to think are ready to run today:

Stock	CAPS Rating 4/7/09	CAPS Rating 7/7/09	Trailing-4-Week Performance	P/E Ratio
HQ Sustainable Maritime Industries (NYSE: HQS)	**	*****	(3.9%)	8.9
EnPro Industries (NYSE: NPO)	**	***	(15.7%)	8.0
M&F Worldwide (NYSE: MFW)	**	***	(26.8%)	3.5

Source: Motley Fool CAPS screener; price return from June 12 to July 7.

Though you may get different results, since the data is updated in real time, you can run your own version of this screen. First let's take a look at why investors  think these companies will go on to beat the market.

HQ Sustainable Maritime Industries
HQ Sustainable may be able to capitalize on growing worldwide demand for tilapia. The U.S. is the second-largest market for the healthy "new white fish," after China -- good news for HQ Sustainable, as it serves its toxin-free, natural tilapia to both markets. Industry watchers expect China, including HQ Sustainable, to produce about 40% of the world's supply by 2010. CAPS member Sprint2Me thinks HQ Sustainable can capitalize: "[HQ Sustainable] is a company that can take advantage of healthier trends worldwide while being "green." Also a play on the growing Chinese economy."

EnPro Industries
EnPro Industries, developer of engineered industrial products, has had to contend not only with a contracting economy and an inevitable decline in sales volume, but also with asbestos-related expenses. Its first-quarter profit plummeted by 7% year over year. However, as the economy has recently begun a slower rate of contraction, so EnPro and similar companies, such as MSC Industrial Direct (NYSE: MSM),  are beginning to see the light at the end of the tunnel. CAPS All-Star Caligiuri writes of EnPro: "Considering Book value, earnings, and market cap ... this should beat the market in 5 years."

M&F Worldwide
Having a diverse business can often act as a defense against decreasing revenues in a specific segment. Yet the hodgepodge of operating units that make up M&F Worldwide (a company that offers check printing, financial services, educational testing services, and licorice!) didn't offer enough of a cushion to stop shares from dropping by more than 50% over the past year. Still, the company managed to turn in higher first-quarter profit as it extinguished debt, reduced interest expenses, and bought back shares. While the result depended heavily on one-time gains, M&F Worldwide should benefit in the future from lower interest expenses.