Wednesday, July 15, 2009

3 Stocks Ready to Roar

There are plenty of strategies for picking stock winners: low P/E stocks, companies selling at a discount to their future cash flows, and more. At the small-cap stock-picking service Motley Fool Hidden Gems, even in this tough market, our analysts can get ahead by finding undervalued stocks that Wall Street and investors have ignored.

Yet what if we could find a way to whittle down our list of prospects beforehand? To discover stocks 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 rise. These stocks have posted strong gains in the past three months, while the rest of the market moved significantly higher, then essentially traded sideways. My screen returned 111 stocks when I ran it, including these recent winners:

Stock

CAPS Rating, Jan. 14, 2009

CAPS Rating, April 14, 2009

Trailing 13-Week Performance

MAP Pharmaceuticals (Nasdaq: MAPP)

**

***

227.0%

National Financial Partners (NYSE: NFP)

**

***

36.4%

Office Depot (NYSE: ODP)

**

***

101.9%

Source: Motley Fool CAPS Screener. Trailing performance from April 17 to July 14.

National Financial Partners, in fact, was previously featured here in February. So while this screen might tell us which stocks we should have looked at three months ago, we'd rather discover which 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, sported valuations lower than the market's average, and hadn't appreciated by more than 10% over the past month.

Out of the 35 stocks the screen returned, here are three attractively priced ideas that investors think are ready to run today!

Stock

CAPS Rating, April 14, 2009

CAPS Rating, July 14, 2009

Trailing 4-Week Performance

P/E Ratio

The Buckle (NYSE: BKE)

**

***

(1.2%)

12.7

Fuel Systems Solutions (Nasdaq: FSYS)

**

***

(17.1%)

13.1

VisionChina Media (Nasdaq: VISN)

**

***

(0.5%)

8.4

Source: Motley Fool CAPS Screener. Price return from June 19 to July 14.

You can run your own version of this screen; bear in mind that the results you get may be different, since the data is dynamically updated in real time. Let's examine why investors think these companies might go on to beat the market.

The Buckle
Along with Aeropostale (NYSE: ARO), fellow teen retailer The Buckle was able to buck the trend of soggy June comps and turn in impressive same-store sale numbers. Top-rated CAPS All-Star member JRtrader08 has a number of great things to say about the company: 

Somebody forgot to tell The Buckle there is a recession: Simply the best apparel retailer around - consistent top & bottom line growth, conservative store growth, and an unbelievable run of 22 consecutive months of double digit same-store sales growth, with 33 straight month of same-store sales gains overall.

Fuel Systems Solutions
With oil prices remaining stubbornly high -- if well below their latest peak -- the alternative-fuel systems sector is attracting CAPS member k007005, who's driving off with Fuel Systems Solutions: "Leader in green engine in a market where every car producers is looking for this kind of technology."

VisionChina Media
Displaying advertising to a captive audience can be a lucrative business for VisionChina. The company shows ads on mass transit, a popular and growing means of travel in China's most populous cities. Better yet, the country is investing even greater amounts in such transit programs, potentially expanding the number of waiting viewers for VisionChina's ads. As CAPS member hurdithere noted: "Growth in advertising and mass transit in China. Huge first mover advantage."

 
 

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