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. 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 103 stocks when I ran it, no doubt reflecting the market's turmoil during that time, and included these recent winners:

Stock	CAPS Rating as of Sept. 3, 2012	CAPS Rating as of Dec. 3, 2012	Trailing 13-week Performance
CommonWealth REIT	**	***	66.9%
Air Transport Services Group	**	***	45.6%
Manpower	**	***	42%

Source: Motley Fool CAPS Screener; trailing performance from Nov. 30 to Feb. 28

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 37 stocks the screen returned, here are three that are still attractively priced, but which investors think are ready to run today:

Stock	CAPS Rating as of Dec. 3, 2012	CAPS Rating as of Feb. 28, 2013	Trailing 4-Week Performance	P/E Ratio
Jazz Pharmaceuticals (NASDAQ: JAZZ  )	**	***	2.2%	12.1
Natural Resource Partners (NYSE: NRP  )	**	***	0.3%	11.1
Select Comfort (NASDAQ: SCSS  )	**	***	(9.4%)	15.0

Source: Motley Fool CAPS Screener; trailing performance from Feb. 1 to Feb. 28.

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.

Jazz Pharmaceuticals
Jazz Pharmaceuticals has been making a slew of acquisitions to bolster its top and bottom lines, and if fourth-quarter results are any indication, the program is working, at least so far. Growth by acquisition is a risky game to play because the vaunted synergies that are always touted ahead of time seem to unravel at the worst moments. But so far Jazz is enjoying strong growth and revenues jumped 127% while profits more than quadrupled to $200.6 million.

It wasn't just buyouts that brought good tidings, though, but also its narcolepsy therapy Xyrem that helped push results above analyst expectations. It also said it signed an agreement with Concert Pharmaceuticals to develop and market its deuterium-modified sodium oxybate compound, which is a key ingredient in Xyrem and which could offer additional patent protection for the drug.

Shares of the pharmaceutical trade slightly below their 52-week high, but the additional opportunities suggest it could be setting new ones soon.

Natural Resource Partners
Metallurgical-coal producer Natural Resource Partners also surprised analysts with a fourth quarter report that beat expectations, but it wasn't really because of its coal operations that it was able to grow. Instead, it was due to royalties received from things that weren't associated with the black rock. Its "other than coal royalty" surged 36% as it received a $6.5 million influx of minimum royalties as well as selling a right-of-way to West Virginia's highway department. Although coal production increased 41% in the quarter, coal revenues were essentially flat from the year-ago period as the average royalty revenue per ton plunged 29%.

Coal will naturally remain a weak spot for Natural Resources, but its investments in sand proppant resources in Wisconsin and the Marcellus shale oil and gas acreage it bought in December diversifies its assets and revenue streams. In addition to the Marcellus region, NRP also owns unconventional plays in the Mississippi lime and Haynesville shale. Any recovery in natural gas prices should run right to NRP's bottom line.

Select Comfort
Investors in specialty mattress maker Select Comfort haven't been able to rest easily as shares have fallen almost 30% over the past year and are down more than 40% from their 52-week high. With its last earnings report lumpier than an old coil-spring mattress -- same stores sales were up 11% and net sales were 17% higher, but earnings were down and guidance was below expectations -- the overall effect caused the stock to plunge.

But the housing market is slowly (OK, very slowly) on the rebound and that will help inflate sales further. When you buy a new house you often buy a new mattress too. Indeed, Select Comfort is on track to generate more than $1 billion in sales next year and when coupled with plans to broaden its customer base by making its offerings more affordable, it seems they've got the right number. This specialty mattress company is one that could be a real sleeper in your portfolio.

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