50 stocks to buy in February

A number of recent surveys show investors becoming more optimistic. Individual investors are drawing encouragement from signs of an improving economy and solid corporate earnings. The Standard & Poor's 500 Index ($INX) rose 4.4% in January in a slow but steady climb that produced the market's best start in 15 years.

Investors may be relieved that 2011 is over, but it's probably worth bearing in mind that the most recent statement from the Federal Reserve foresees a fragile recovery that will require short-term interest rates being kept near zero until late 2014.

The Fed noted that "the economy has been expanding moderately'' and the nation's unemployment rate has been coming down. But the central bank also highlighted persistent challenges, including the depressed housing market and financial crises abroad, that may mean the recovery will continue taking one step backward for every two steps forward it takes.

For investors seeking reliable clues about what's likely to work in this market, StockScouter's Benchmark Portfolio for February is an ideal place to launch investment research.

The portfolio was created using StockScouter, MSN Money's stock-picking tool. Each month, StockScouter generates a list of 50 stocks whose business fundamentals, price behavior, valuation and stock-ownership characteristics appear to predict a rising price in the coming weeks, based on how those factors have influenced stock prices in the past.

Here are StockScouter's best investment ideas for February.

Putting StockScouter to work

Investment research company Verus Analytics (previously known as the quantitative business unit of Gradient Analytics) uses StockScouter to create daily and monthly stock lists. Writer Jon Markman, at the time a columnist for MSN Money, collaborated with Gradient researchers on the tool.

An investor who began in 2001 investing in each of the top 10 stocks at the start of the month, selling them at the end of the month and then starting fresh with another 10 stocks, would have generated returns, before trading costs and taxes, of 701% through Dec. 31.

Markman, in this column, suggested rolling over the top 10 stocks every six months to hold down trading costs, a strategy that might be a better fit for most investors; that would yield different results, which would vary based on your starting point.

An innovative mix

StockScouter depends on advanced mathematics and software, as well as an innovative mix of measurements and historical testing to forecast the short- and long-term outlook for all U.S. companies that have traded on the major exchanges for at least the past six months.

The analytical tools score stocks on fundamental, valuation, technical and ownership components.