5 More Unloved Growth Stocks

Ah, the joys of skepticism.

We rebel investors at Motley Fool Rule Breakers believe the multibaggers in the making, while not often cheap by the numbers, are always misunderstood. The extraordinary skepticism they face makes them excellent value stocks.

Hitting just one of these home runs can make all the difference to your portfolio. Just ask David Gardner, who bought Amazon at a split-adjusted price of $3.24 a share in 1997. The stock is up more than 2,100% since.

It's stocks like Amazon that helped David produce nine years of better-than-20% average annual returns in the real-money Rule Breaker portfolio, even while suffering stinging losses from Guitar Center and 3Dfx, among others.

Let the haters be your friends
David continues this home-run investing tradition today at Rule Breakers. You can follow the moves of his rebel alliance with a free trial of the service. Or, if you prefer to pick your own stocks, there's Motley Fool CAPS, a 100% free stock-picking community whose 82,000 participating investors rate stocks on a scale of one to five stars. More than 5,300 rated companies are in the database right now.

How can this help you? Each week, using CAPS, we'll search for one- and two-star stocks that have at least 5% of their available shares sold short but are expected to grow their earnings by no less than 15% over each of the next five years.

Let's have the list
Here are today's unloved growth stocks:

Company

CAPS Rating (out of 5) 

Short Interest

5-Year Growth Estimate

Baidu.com (NASDAQ:BIDU)

**

9.1%

60.2%

Bare Escentuals (NASDAQ:BARE)

**

11.8%

25%

P.F. Chang's (NASDAQ:PFCB)

**

36.1%

19.5%

VeriSign (NASDAQ:VRSN)

**

9.2%

17.5%

Navigant Consulting (NYSE:NCI)

**

10.3%

15.9%

Sources: 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.

At first, I was tempted to go with Rule Breakers pick Baidu, to which investors have waved bye-bye in recent days -- even though its signature search engine is now up and running in Japan. Doesn't seem quite fair, does it? That's manic Mr. Market for you.

Mmmmm, that smells good
Sometimes he'll punish good stocks for years. Ask anyone who owns shares of P.F. Chang's, which is down 27% from a year ago.

I can't see how that's justified. Nor, apparently, can insiders. Three insiders spent more than a half-million dollars to acquire shares of P.F. Chang's on Nov. 30. Several others were buying in October at prices very close to yesterday's closing price of $28.41 a share.

CAPS investors aren't as steadfast. Since Jan. 1, six stock pickers have rated P.F. Chang's to underperform. Another six believe the restaurateur will outperform. Professional investors, meanwhile, appear to see a bargain. Top stock pickers at Buffalo Funds and Vanguard, including the team at Champion Funds pick Vanguard Explorer (VEXPX), were buying as of September.

With a relatively modest 1.13 PEG ratio, I think you'd be smart to join them. But that's my take. What's yours? Would you buy P.F. Chang's at today's 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 unloved growth stocks.


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