Tech Investors' Dream Stocks

Investors are always hunting for the next big stock -- the dream stock whose price increases several times over when the market finally discovers it. It's easy to look back at the 10 best stocks of the past decade. But for my part, I'm more interested in tools that can not only help me find new stock ideas, but also have the resources necessary to evaluate tomorrow's greatest companies.

There is a tool that offers a variety of resources to help us find tomorrow's leaders: Motley Fool CAPS.

We've enlisted CAPS to screen for top technology stocks and get the story behind them. CAPS' nifty screener will help us find stocks with:

  • A market cap of at least $100 million.
  • A three-year revenue growth rate of at least 20%.
  • A price-to-earnings ratio of less than 25.

Then we'll tap the collective intelligence of our 115,000-plus CAPS members to see whether these companies present real opportunities -- or whether the numbers fail to tell the true story.

Opinions with the numbers
Here's a sampling from the list of stocks our screen pulled up today.

Company

Revenue Growth Rate,
Past 3 Years

CAPS Rating
(out of 5)

America Movil (NYSE: AMX  )

27.1%

*****

Activision Blizzard (Nasdaq: ATVI  )

25.4%

*****

Dolby Laboratories (NYSE: DLB  )

20.4%

*****

Adobe Systems (Nasdaq: ADBE  )

21.0%

****

Data and star rankings from CAPS. All data as of Oct. 10, 2008.

America Movil
Wireless services provider America Movil has positioned itself to profit from the rapid growth in wireless subscribers in emerging Latin American countries. The fantastic growth has already put its main stakeholder, Carlos Slim Helu, in the list of the three richest men in the world. What makes America Movil attractive to investors is that it has the ubiquity and scale of northward counterparts AT&T (NYSE: T  ) or Verizon, while still having a very large untapped market.

With a forward earnings multiple of only 8.8 and an expected long-term growth rate of more than 23%, America Movil's bargain price easily puts it in the dream investment category, and 99% of the 1,581 CAPS members rating America Movil believe it will outperform the market.

Activision Blizzard
Everyone wants to be a rock star these days, and Activision Blizzard hopes to help by following its top-selling Guitar Hero video game with the release of DJ Hero. This adds to the music genre of games like Viacom's (NYSE: VIA  ) Rock Band and Konami's Rock Revolution. If DJ Hero holds any spark of its predecessor's success, investors should be pleased -- the Guitar Hero brand brought in more than $1 billion by the start of 2008.

Industry trends bode well, too, as video game retail sales rose 9% in August, and the industry remains on target to reach $22 billion to $24 billion in revenues for the year, according to market researcher NPD Group. No wonder then that 97% of the 2,616 CAPS members rating Activision Blizzard say the game is on, and have voted for shares to beat the market.

Dolby Laboratories
With a three-year EPS growth of 51%, there's a lot more to Dolby Labs than just an attractive top line. The licensor of audio and video technology catches the eye of many investors for its impressive margins -- which have continued to expand rapidly -- and asset-light business model.

Known for being a technology innovator, Dolby is rapidly expanding its presence as the leading provider of 3-D cinema technology, and the company has seen plenty of early success as it expands into Europe and Asia. With all the potential ahead of it, more than 97% of the 2,753 CAPS members rating Dolby are bullish.

Adobe Systems
Software provider Adobe has monopolistic qualities in its portable document market segment, as some see no viable alternatives for tasks such as PDF creation. And despite efforts by Apple's Quicktime and Microsoft's (Nasdaq: MSFT  ) Silverlight, Adobe's Flash is becoming the standard for online video sites.

Business remains strong as sales grew by 4% in its fiscal third quarter. And the launch of Creative Suite 4 is another reason many investors are expecting big things from Adobe in the future. More than 95% of the 1,372 CAPS members rating Adobe Systems see it beating the S&P.

Let 115,000 members be the judge
The collective wisdom of a huge pool of investors can help give context to a page of numbers developed through a stock screen. But even with an entire community of qualified opinions acting as the judge, individual investors are still the jury and should perform their own due diligence.

Run your favorite factors through the Motley Fool CAPS screener. It's totally free, and we think you'll like the results.

Motley Fool Global Gains is yet another Foolish resource to help you find promising investment opportunities beyond our borders. Check out the stocks that the team has tapped for extraordinary growth with a trial that is free for 30 days.

Fool contributor Dave Mock dreams of stocks and sugarplum fairies, but not together. He owns no shares of companies mentioned here. America Movil is a Global Gains recommendation. Microsoft is an Inside Value selection. Dolby Laboratories and Activision Blizzard are Stock Advisor recommendations. The Fool's disclosure policy screens the good, the bad, and the ugly.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 14, 2008, at 5:00 PM, PDFPublisher wrote:

    >>some see no viable alternatives for tasks such as PDF creation

    I beg to differ with your reasons for seeing Adobe as a monopolistic evergreen. Unlike Microsoft's file formats, Adobe deliberately made PDF an open standard. This has allowed competitors like http://www.soliddocuments.com and http://www.nitropdf.com to build a rich array of competitors to Adobe's Acrobat PDF product.

    While I agree that Adobe is a great long term bet, I certainly do not believe that they have a stranglehold on PDF creation and editing. After all, the latest service pack of Office 2007 allows creation of ISO compliant PDF files directly from Word without the need for ANY third party products.

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