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 investors marked up before their share prices rose over the past three months. My screen returned 159 stocks when I ran it, no doubt reflecting the market's turmoil during that time, and included these recent winners:
CAPS Rating, 10/3/11
CAPS Rating, 1/3/12
|China Distance Education||**||***||78.8%|
Source: Motley Fool CAPS Screener; trailing performance from Jan. 6 to April 3.
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 47 stocks the screen returned, here are three that are still attractively priced but that investors think are ready to run today:
CAPS Rating, 1/3/12
CAPS Rating, 4/3/12
|Cooper Tire & Rubber (NYS: CTB)||**||***||(5.8%)||3.8|
|Symantec (NAS: SYMC)||**||***||4.4%||18.0|
|Zebra Technologies (NAS: ZBRA)||**||***||4.7%||12.8|
Source: Motley Fool CAPS Screener; price return from March 9 to April 3.
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.
Cooper Tire & Rubber
With the onset of the recession, the number of vehicle miles driven has moved back from its peak but in 2012 are on the rise again, according to the Federal Highway Administration's latest survey. That bodes well for U.S. tire makers Cooper Tire & Rubber and Goodyear (NYS: GT) , both of which rely upon having motorists burn up their treads and purchase replacement tires.
Yet where Goodyear sells tires to automakers as original equipment as well as into the replacement market, Cooper sells exclusively into the replacement market. Like many industries, the tire makers have felt the impact of higher input costs, and Cooper has tried to mitigate that by increasing production in China and consolidating manufacturing plants here. A tariff President Obama imposed on China tires in 2010 (which China responded to by doubling the tariff on U.S. chicken exports) should expire this September, giving Cooper an open road to drive on.
Add Cooper Tire & Rubber to the Fool's free portfolio tracker to see if whether can further rev the engines of profitability.
Security software specialist Symantec continues to line up top-name customers as the market analysts at Gartner expect sales of security solutions to grow 10% in 2012.
Third-quarter results were a solid effort as revenues and earnings beat expectations on the strength of having signed 135 transactions valued at more than $1 million each. In comparison, it had just 56 transactions in the second quarter and 118 in the year-ago period. Its sales team noted that approximately 41% of the deals were over $1 million, including both security and storage products. With more new products rolling out, it should be able to gain share in its storage and server management business.
While it still faces stiff competition from Intel's (NAS: INTC) McAfee, Symantec's exposure to the mobile markets should carry it through. CAPS member youngblood58 likes the results it's been achieving.
A good quarter for one of the leading security firms going. Possible takeover target to boot later in 2012. I've waited a bit too long, but might as well get on this before it hits $20/share.
Let us know on the Symantec CAPS page if you'd feel secure putting your money in this software specialist.
Bar-code systems maker Zebra Technologies saw its sales and profits rise last quarter, but not as much as Wall Street had been looking for, and it guided first0quarter results below expectations. While ScanSource is Zebra's biggest customer, accounting for almost 21% of sales, international sales represented 58% of its total revenues, so European financial0market turmoil probably played a role in its less than stellar outcome.
Yet ScanSource is looking for further growth this year, and analysts are expecting double-digit earnings increases, all of which should help strengthen Zebra.
With 92% of the 131 CAPS members rating the bar-code scanner specialist to outperform the market indexes, they think it's pretty black-and-white that it will succeed. Give us your thoughts on the Zebra Technologies CAPS page, and then add it to your Watchlist to see whether its RF tags and GPS product systems can locate the right area to expand.
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, and 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 Dupreyowns shares of Intel, but he holds no other position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool owns shares of Intel.Motley Fool newsletter serviceshave recommended buying shares of Intel. The Motley Fool has adisclosure policy. We Fools don't 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.
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