3 Stocks Set to Soar
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 are able to 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 145 stocks when I ran it, no doubt reflecting the market's turmoil during that time, and included these recent winners:
CAPS Rating Sept. 21, 2011
CAPS Rating Dec. 21, 2011
Trailing 13-Week Performance
Source: Motley Fool CAPS Screener; trailing performance from Dec. 23 to March 21.
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 52 stocks the screen returned, here are three that are still attractively priced, but which investors think are ready to run today:
CAPS Rating Dec. 21, 2011
CAPS Rating March 21, 2012
Trailing 4-Week Performance
Andersons (NAS: ANDE)
Clayton Williams Energy (NAS: CWEI)
PNC Financial Services (NYS: PNC)
Source: Motley Fool CAPS Screener; price return from Feb. 24 to March 21.
You can run your own version of this screen over on CAPS; just remember that the data are 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.
Farm products producer Andersons saw revenues in its ethanol segment surge 30% last quarter while operating income doubled. Archer Daniels Midland (NYS: ADM) , the leading ethanol producer, saw similar trends with an 11% jump in revenues. But the rush into ethanol production is leading to a supply glut, and prices fell sharply last week on oversupply concerns.
Yet look for Andersons to prosper across all its segments, from grains to fertilizers. While certain parts of the business may appear soft, such as ethanol (though it did just buy another ethanol facility), agricultural products in general should remain a prosperous sector to invest in.
Food price inflation seems to be the watchword for Andersons on CAPS, and BlackMomba321 believes it will drive its stock price higher: "Long-term growth. We are headed for some major inflaction, particularly in food prices."
Add Andersons' stock to your watchlist to see whether the seeds of growth will sprout for it.
Clayton Williams Energy
Independent energy provider Clayton Williams Energy has seen its shares more than double from their October lows, yet they're still trading almost 20% below what they were a year ago. No doubt concern about China's manufacturing capabilities contributing to a global economic slowdown are helping pressure the stock as oil slides to $105 per barrel. With natural gas prices also remaining at record lows, even its ability to exploit the rich Eagle Ford region is called into question.
But look for this low-profile exploration and production play to surprise, even if it missed analyst earnings expectations. Some 230 CAPS members have drilled down on Clayton Williams, and 90% of those weighing in say it will beat the Street going forward. Let us know on the Clayton Williams Energy CAPS page whether it's an investment you should be making, too.
PNC Financial Services
Banking specialist PNC Financial Services is set to be hit with fines from the Federal Reserve for its practices during the "robo-signing" scandal along with seven other banks, including US Bancorp (NYS: USB) and Goldman Sachs. But PNC's business remains sound, so plans to hike its dividend met with the regulators' approval. It passed the latest round of stress tests, and analysts view its cash balances and plans to effectively manage risk and expenses as signs there's more growth ahead for the bank.
While there's a large contingent of CAPS members doubting its ability to surpass the broad indexes in performance, almost three-quarters of those registering their view think it can succeed. Give us your thoughts on the PNC Financial Services CAPS page, then add it to your watchlist to keep track of it.
Three for free
Are these companies still a good value and 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, then check out this free report on dividend-paying stocks whose engines are all revved up. You can read it for free, but hurry because it won't be around for long.
At the time this article was published Fool contributorRich Dupreyholds no position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of PNC Financial Services Group.Motley Fool newsletter serviceshave recommended buying shares of The Goldman Sachs Group. The Motley Fool has adisclosure policy.We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.