Are you really a growth investor?
It's worth asking. Fast-moving tech stocks have taken a beating recently, leading to a slew of bargains for those with the guts to buy.
No surprises there. Market panics occur daily. Just ask investors who hold shares of laser-gun maker Ionatron
That's why all-star investors bet on growth over the very long term. They know that:
- Businesses that make investors billions always begin as growth stocks.
- The best of them feature massive and identifiable competitive advantages.
- 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 seeks 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
Now, with that preamble behind us, here are five more top growth stocks:
|
Company |
No. of CAPS Ratings |
Bullish CAPS Ratings |
5-Year Growth Estimate |
|---|---|---|---|
|
Hercules Offshore |
818 |
805 |
40% |
|
Middlebrook Pharma. |
30 |
27 |
30% |
|
Cynosure |
297 |
288 |
30% |
|
CyberSource |
105 |
97 |
25.6% |
|
Inovio Biomedical |
22 |
22 |
25% |
Bear in mind that this isn't a list of recommendations. Instead, I offer these stocks as candidates for further research.
At first, I was tempted to go with Cynosure, whose laser products are frequently used for cosmetic surgeries. You're not surprised, are you? I've never had work done, but let's be honest -- in a culture where Nip/Tuck is a hit show, it's easy to envision near-endless growth for this industry.
You need a hero
But "endless growth," like "sure, I'll call you," is one of those phrases that almost always disappoints. So it's probably better to go with a cheap grower, and Hercules Offshore fits that bill perfectly.
Think of it as the pickax-seller of the oil-and-gas gold rush. Hercules provides jack-up rigs, barges, and other equipment to explorers, many of whom operate in the shallow yet dangerous waters of the Gulf of Mexico.
Trouble is, with dayrates for natural gas -- the Gulf's hottest commodity -- down substantially since 2005, Hercules has suffered. The stock is down 23% over the past 52 weeks alone.
Today, Hercules is a Motley Fool Hidden Gems pick, but not for the reasons you might expect. Hercules acquired former selection TODCO earlier this year. Synergy has yet to appear, but there's reason to be optimistic, according to Foolish colleague Toby Shute: "When (not if) the shallow Gulf of Mexico market improves, Hercules will be able to flex its muscle. So back off, Sorbo, and give this company some time."
I've added the stock to my CAPS portfolio, but that's me. Would you buy Hercules Offshore at current prices? Let us know by signing up for CAPS today. It's 100% free to participate.
See you back here next week for five more top growth stocks.
