50 stocks to buy in October

The markets just went through the most volatile three months since the depths of the 2008-09 financial crisis, and few market watchers foresee calm returning in the fourth quarter.

Eyes will remain trained on Europe to see whether the eurozone's problems drive the global economy into a recession. In addition, U.S. unemployment is stuck above 9% and Washington is paralyzed by partisanship.

Further, corporate earnings are unlikely to provide much clarity as long as the daily flow of economic news remains ambiguous.

Yet there are also potentially bullish factors. Among them: The 14.3% fall in the Standard & Poor's 500 Index ($INX)over the past three months has left stocks with valuations that some investors and analysts think make them a bargain -- or at least too cheap to sell.

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

The 50-stock 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 October:

Investment research firm Gradient Analytics uses StockScouter to create daily and monthly stock lists. Writer Jon Markman, at the time a columnist for MSN Money, collaborated with the company to devise strategies for putting the tool to work.

One of Markman's strategies involved investing an equal amount of money in each of the stocks in the computer-generated portfolio, selling them six months later, then beginning the process again. For investors who prefer to handle fewer stocks, Markman recommended using the strategy with just the top 10 stocks on the list.

An investor who followed Markman's 10-stock strategy since it was launched in January 2001 would have realized a gain of 637% through Sept. 30 of this year, according to Gradient Analytics, and had an average annual return of 21.6%.

Over the same period, the S&P 500 lost 6.6%.

An innovative mix

StockScouter depends on advanced mathematics and software and 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.

This score is combined with each company's StockScouter rating to come up with the list in the above chart. Only stocks with a final closing price above $3 are eligible for the list.