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 just 53 stocks when I ran it, no doubt reflecting the market's turmoil during that time, and included these recent winners:
CAPS Rating 1/3/12
CAPS Rating 4/3/12
Trailing 13-Week Performance
Source: Motley Fool CAPS Screener; trailing performance from April 5 to July 2.
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 18 stocks the screen returned, here are three that are still attractively priced, but that investors think are ready to run today:
CAPS Rating 3/5/12
CAPS Rating 7/5/12
Trailing 4-Week Performance
Amdocs (NYS: DOX)
Barclays (NYS: BCS)
Swift Energy (NYS: SFY)
Source: Motley Fool CAPS Screener; price return from June 8 to July 5.
You can run your own version of this screen over on CAPS; just remember that the data is 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.
Last quarter's results from customer relations management specialist Amdocs were strong, though you'd never know it since the stock dropped over 12% over the ensuing weeks. It's bounced off the lows it hit, but because its largest customer AT&T lost out on its bid to acquire T-Mobile, the revenue stream coming from that direction is muted. It previously expected total revenues to grow 5% to 6% in 2012, but now says it only anticipates a 3% to 4% increase. Profits, though, remain healthy and it expects non-GAAP EPS growth of 12% to 14% compared to prior expectations of 11% to 13%.
More than 200 CAPS members have weighed in on Amdocs, and 95% believe it will overcome the AT&T hiccup and still beat the market indexes. Tell me on the Amdocs CAPS page if you agree, then add its stock to the Fool's free portfolio tracker to follow its progress.
Nothing like a little scandal to send your stock reeling 20% in a week, which is exactly where British banking giant Barclays finds itself after getting caught up in a bid to rig LIBOR rates. Foolish writer Daniel Ferry explains that Barclays falsely submitted what rates it was paying -- and investigations are under way at Bank of America (NYS: BAC) , Citigroup (NYS: C) , and JPMorgan Chase (among others), too -- as it would have allowed them to illegally profit while raising rates on mortgages, student loans, and businesses.
"If Barclays and other banks were able to successfully falsify this rate, even slightly," Ferry writes, "the result might be the largest securities fraud ever known."
The stock, though, seems to have already found a floor at its current level, and CAPS member callumturcan believes it is ready to bound higher: "Undervalued, trading at .37 book value. Good estimated growth rates going forward, and should pop once a new CEO is found." Let us know on the Barclays CAPS page if you'd deposit this stock in your account.
Depressed natural gas prices have claimed another victim this earnings season as Swift Energy saw profits plunge 82% this past quarter and blew through the already reduced expectations analysts had set for the energy company. Coupled with rising expenses, the stock was cut in half.
It's managed to turn the corner a bit as the stock has inched higher, and it seems as if the worst of the natural gas pricing debacle is behind the industry, even if prices remain at historically low levels. Swift's oil production was up 6% from the year-ago period, and with sabers being rattled in the Middle East once more, we may see higher prices on that front.
Tell us on the Swift Energy CAPS page or in the comments section below if you think this energy stock can swiftly recover its footing.
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 if energy stocks like Swift are your thing, then check out this free report on "The Only Energy Stock You'll Ever Need." You can read it for free, but hurry, because it won't be around for long.
At the time thisarticle was published Fool contributor Rich Duprey holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of JP Morgan Chase, Bank of America, and Citigroup. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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