Four Stocks with More Room to Run

• By Jeremy Glaser
• On 7:00 am EDT, Saturday September 26, 2009

Investors who pulled out of the market after seeing their brokerage accounts devastated have been watching nervously as stocks shot up from their March lows. Undoubtedly, some of this fear of having missed the rally is well founded. The easy money has been made. Our equity analysts now believe that the market is roughly fairly valued--a far cry from the 45% discount they saw at the onset of the credit crisis.

But this doesn't mean that there isn't any money left to be made in this market. Beyond the prospect of another pullback creating attractive valuations, many high-quality firms still look cheap despite big runups. These stocks were so battered during the downturn that they still aren't trading for their intrinsic worth, even after big recent gains. So don't be too stressed about missing the bull market because you can still pick up a great business at a reasonable price, and isn't that what stock investing is all about?

To find stocks that still have room to run, we used Morningstar's Premium Stock Screener. We looked for narrow- and wide-moat stocks that had top quartile returns over the last three months and that were rated 4 or 5 stars. Below are a few names that passed. To see the full list and to run the screen for yourself, click here. (Not a Premium Member? Give us a try with a 14-day free trial.).

FedEx (NYSE:FDX - News) | Moat: Narrow | 3 Month Return: +42.54%
From the Analyst Report:
FedEx increases its formidable competitive advantages by deploying a portion of its cash flow to acquire strategic assets around the globe. It has built a massive international network that's difficult to duplicate, giving the company a narrow economic moat. We expect FedEx to exploit its competitive advantages for years to come, despite the challenges of fuel price shocks and global economic cycles.

Chesapeake Energy (NYSE:CHK - News) | Moat: Narrow | 3 Month Return: +42.23%
From the Analyst Report:
In the summer of 2008, Chesapeake Energy's shale acreage position in terms of size and scope was arguably second to none. However, an aggressive operating and financing strategy coupled with a precipitous drop in natural gas prices have forced the firm to sell assets and find partners to support the drilling capital needed to develop its acreage and shore up its balance sheet. Although its net acreage base is smaller today, its expertise in shale-based natural gas remains.

Rockwell Automation (NYSE:ROK - News) | Moat: Narrow | 3 Month Return: +39.72%
From the Analyst Report:
Rockwell's decision to concentrate on factory automation and controls have helped improve overall corporate margins and returns on invested capital. Going head-to-head with industrial giants Siemens (NYSE:SI - News), Emerson (NYSE:EMR - News), and ABB (NYSE:ABB - News), Rockwell has managed to capture market share and expand into the growing machine-safety markets. Rockwell has used a significant lead in technology and partnered that with a strong distribution force to hold market-leading positions globally. Setting it apart from the pack is the firm's deep domain knowledge, which starts with concentrating on its customers' industries. For instance, by matching a customer in the food and beverage industry with engineers who have spent their careers providing machines to the food and beverage industry, Rockwell is able to better target customer needs and prove the value that it has to offer.

Black & Decker (NYSE:BDK - News) | Moat: Narrow | 3 Month Return: 61.52%
From the Analyst Report:
The ability to develop innovative products, pursue strategic acquisitions, and build a strong brand has helped Black & Decker become one of the sharpest names in the power tool market. However, slowdowns in construction activity and weakening demand from customers could dull this narrow-moat firm's performance over the short term.

Buzz up!