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I ran a screen for potentially undervalued stocks which have strong fundamentals and growth, have recently have beaten analyst estimates (last quarter and by at least 10%) and have been upgraded by brokers last week.

1) Capital One Financial Corp. (COF) - operates as the bank holding company for the Capital One Bank, National Association (COBNA), and Capital One, National Association (CONA), which provide various financial products and services in the United States, the United Kingdom, and Canada. It offers consumer and small business credit card lending, national closed end installment lending, and the international credit card lending services.

It reported $2.72 EPS in March 2012, beating average analyst estimates of $1.39 (95.7% surprise). The median price target set by analysts is $66.50, which represents 22.3% potential upside for the stock. On 8th of May, 2012, it was upgraded from Sell to Hold by Argus Research. It also is relatively cheap in terms of P/E trading at 7.33 trailing earnings and 7.91 forward earnings.

2) The Hershey Company (HSY) - together with its subsidiaries, engages in manufacturing, marketing, selling, and distributing various chocolate and confectionery products, pantry items, and gum and mint refreshment products worldwide.

It reported $0.96 EPS in March 2012, beating average analyst estimates of $0.81 (18.5% surprise). The company has 5 year historic EPS growth of 13.31%. The median price target set by analysts is $71, which still represents 3.7% potential upside for the stock. On 9th of May, 2012, it was upgraded from Hold to Buy by Argus Research.

3) ARM Holdings plc (ARMH) - together with its subsidiaries, engages in the design of microprocessors, physical IP, and related technology and software; and sale of development tools to enhance the performance of high-volume embedded applications.

It reported $0.16 EPS in March 2012, beating average analyst estimates of $0.14 (14.3% surprise). The company has 5 year historic EPS growth of 20.75%. The average price target set by analysts is $30.76, which represents 27% potential upside for the stock. On 10th of May, 2012, it was upgraded from Underperform to Market Perform by Bernstein.

4) Under Armour, Inc. (UA) - engages in the design, development, marketing, and distribution of apparel, footwear, and accessories for men, women, and youth worldwide.

It reported $0.28 EPS in March 2012, beating average analyst estimates of $0.25 (12% surprise). The company has 5 year historic EPS growth of 23.96%. The median price target set by analysts is $104, which represents 9.7% potential upside for the stock. On 8th of May, 2012, it was upgraded from Neutral to Buy by UBS. Moreover, on the same day The Benchmark Company initiated a new call to Buy this stock.

5) NewMarket Corporation (NEU) - through its subsidiaries, engages in the petroleum additives and real estate development businesses. The company offers lubricant additives that are used in various vehicle and industrial applications, including engine oils, transmission fluids, gear oils, hydraulic oils, turbine oils, and in various other applications where metal-to-metal moving parts are utilized.

It reported $5.03 EPS in March 2012, beating average analyst estimates of $3.47 (45% surprise). The company has 5 year historic EPS growth of 40.17%. On 7th of May, 2012, it was upgraded from Strong Sell to Hold by Northcoast Research.

6) EXCO Resources, Inc. (XCO) - an independent oil and natural gas company, engages in the exploration, exploitation, development, and production of onshore U.S. oil and natural gas properties with a focus on shale resource plays. It reported $0.03 EPS in March 2012, beating average analyst estimates of ($0.01) loss. On 8th of May, 2012, it was upgraded from Hold to Buy by Keybanc.

7) Veeco Instruments Inc. (VECO) - together with its subsidiaries, designs, manufactures, and markets various equipments to make light emitting diodes (NASDAQ:LEDS) and hard-disk drives worldwide. The company’s LED and Solar segment designs and manufactures metal organic chemical vapor deposition and molecular beam epitaxy systems and components for the manufacturers of LEDs, wireless devices, power semiconductors, and concentrator photovoltaics, as well as to research and development applications.

It reported $0.49 EPS in March 2012, beating average analyst estimates of $0.19 (157.9% surprise). The company has 5 year historic EPS growth of 94.71%. The median price target set by analysts is $34.5, which was beaten on 1st of May right after the earnings surprise. On 9th of May, 2012, it was upgraded from Neutral to Overweight by Piper Jaffray.

8) Beacon Roofing Supply Inc. (BECN) - distributes residential and non-residential roofing materials. The company’s residential roofing products include asphalt shingles, synthetic slates and tiles, clay and concrete tiles, slates, nail base insulation, metal roofing, felt, wood shingles and shakes, nails and fasteners, metal edgings and flashings, prefabricated flashings, ridges and soffit vents, gutters and downspouts, and other accessories.

It reported $0.07 EPS in March 2012, beating average analyst estimates of ($0.08) loss. The company has 5 year historic EPS growth of 13.75%. The median price target set by analysts is $30, which shows 17.9% potential upside for the stock. On 11th of May, 2012, it was upgraded from Hold to Buy by Keybanc.

9) LSB Industries Inc. (LXU) - through its subsidiaries, engages in the manufacture and sale of geothermal and water source heat pumps, air handling products, and chemical products. The company operates in two segments, Climate Control Business and Chemical Business.

It reported $0.61 EPS in March 2012, beating average analyst estimates of $0.48 (27.1% surprise). The company has 5 year historic EPS growth of 13.61%. The median price target set by analysts is $48, which shows 47.6% potential upside for the stock. On 10th of May, 2012, it was upgraded from Market Perform to Outperform by Northland Securities.

Business descriptions and financial data taken from Yahoo Finance.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 9 Stocks With Recent Positive EPS Surprises And Upgrades Last Week