By Massimo Santicchia This S&P stock screen was built to combine two investing strategies. One is a

"contrarian" approach focusing on stocks with a low

price-to-earnings (p-e) ratio. The other: a "momentum" approach -- keying on stocks reporting upside earnings surprises.

Here's why. When stocks with low p-e ratios report positive earnings "surprises," they have more potential for appreciation in the following three, six and even 12 months than those that also report surprises but carry higher p-e multiples.

S&P selected S&P 500 stocks that reported an earnings surprise greater than 20% in the most recent quarter. Of the 37 stocks that made the cut, S&P chose the 20 with the lowest p-e ratios.

Here are the stocks that emerged:

Company Name

P/E Ratio

Positive Surprise (5)

Albertson's Inc.

16.66

20

Amerada Hess Corp.

8.594

20

Block H & R Inc.

21.671

131.579

Cabletron Systems

10.932

33.333

CMS Energy Corp.

13.892

30

Corning Inc.

27.834

21.429

Devon Energy Corp.

13.441

27.933

Edison International

7.223

25

Engelhard Corp.

14.862

41.463

Entergy Corp.

13.428

29.167

EOG Resources Inc.

18.741

27.885

National Semiconductor

6.415

35

Nucor Corp.

10.301

45.07

Oneok Inc.

18.671

50

Phillips Petroleum Co.

10.213

21.973

PPL Corp.

12.56

35.938

Reebok International Ltd.

23.453

57.143

Sunoco Inc.

9.739

33.898

Visteon Corp.

4.322

21.053

Williams Cos. Inc.

28.377

147.826

Santicchia is a portfolio analyst for Standard & Poor's