5 More Top Growth Stocks

Are you really a growth investor?

It's worth asking. Even though talk of a growth stock rally has spread to the pages of The Wall Street Journal, investing in fast movers can be a stomach churning-experience.

This week offers a good example. On Monday, news of a possible strike among Nigerian workers sent per-barrel oil prices above $69, a nine-month high, and obliterated high-growth stocks in unrelated industries.

Rule Breakers pick Blue Nile (Nasdaq: NILE  ) , a digital jeweler, was one of the victims. Shares of Blue Nile were down more than 3%, despite executives projecting $1 billion in annual revenue within seven years. That would more than triple today's run rate. Score one for the skeptics.

Nevertheless, that sort of outrageous potential attracts all-star investors to growth stocks, including Fidelity's Harry Lange. He and others like him know that:

  1. Businesses that make investors billions always begin as growth stocks.
  2. The best of them feature massive and identifiable competitive advantages.
  3. Growth as a strategy has the capacity to deliver 20% or greater annual returns for decades at a time.

How we do it
Of course, not all growth stocks will do. Our weekly hunt looks for the next great multibagger. But unlike David Gardner and his team at Motley Fool Rule Breakers, who scour everything from financial statements to trade magazines to clinical reports in their research, we're going to rely on our Motley Fool CAPS investor-intelligence database.

Specifically, we're looking for stocks that have earned a five-star rating in CAPS, and which are expected to grow their earnings by at least 20% annually over the next five years. Five-star stocks are those that the community, on the whole, believes will outperform the S&P 500.

Let's have the list
Here are five more top growth stocks:

Company

No. of CAPS Ratings

Bullish CAPS Ratings

5-Year Growth Estimate

Edgewater Technology (NASDAQ:EDGW)

21

20

30.0%

Flow International (NASDAQ:FLOW)

75

74

28.0%

Concur Technologies (NASDAQ:CNQR)

76

73

25.0%

MEDTOX Scientific (NASDAQ:MTOX)

141

137

22.0%

Team Inc. (NASDAQ:TISI)

55

54

25.0%

Source: Motley Fool CAPS, Yahoo! Finance

Bear in mind that this isn't a list of recommendations. Instead, I offer these stocks as candidates for further research. But of these five, MEDTOX that interests me most. I'll let CAPS All-Star CaptBeer explain the thesis:

MEDTOX Laboratories engages in forensic toxicology (primarily laboratory testing for identification of drug-abuse), providing these services to private and public companies, drug treatment counseling centers, occupational health clinics and hospitals, as well as third-party administrators. Income growth of 106%.

Intrigued? Do your own due diligence, then check in with thousands of other investors at CAPS. If you'd like, add your own commentary, too. You'll be helping your fellow Fools and testing your ideas at the same time. Click here to get started now; the service is 100% free.

See you back here next week for five more top growth stocks.

Blue Nile is a member of the market-beating Rule Breakers portfolio, which boasts seven stocks that have at least doubled. Get 30 days of risk-free access to the service right now. There's no obligation to subscribe.

Fool contributor Tim Beyers, who is ranked 6,522 out of more than 30,500 rated investors in CAPS, is a sucker for growth stocks and a regular contributor to Rule Breakers. Tim didn't own shares in any of the companies mentioned in this article at the time of publication. Tim's portfolio holdings can be found at his Fool profile. His thoughts on growth stocks, Foolishness, and investing in general may be found in his blog. The Motley Fool's disclosure policy is your portfolio's competitive advantage.


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