Growth stocks are the beauties of the stock world, plain and simple. They're exciting, they have good stories, and they can make you a lot of money.
But for all their beauty, growth stocks are also the prima donnas of the market. They can be erratic, they don't always live up to their billing, and they tend to attract a shareholder base that's ready and willing to run at the first signs of slowdown. For those reasons, caution is certainly in order when you enter the world of growth investing.
Fortunately, The Motley Fool's CAPS service brings us the collective intelligence of a community of more than 135,000 investors and is a great resource for separating the Jessica Albas from the Jabba the Hutts. Each of the stocks competing for this week's top spot has a market cap of at least $100 million and grew its net profit per share by an average of 20% or more per year over the past three years. (You can run the screen for yourself.)
Let's go ahead and meet our contestants.
Many investors have started to look toward gold companies like Goldcorp (NYSE: GG ) and competitors Barrick and Kinross to shield against a coming wave of inflation. Gold has always been at the top of the list of investments when inflation fears start percolating, as the metal holds its purchasing power as paper currencies devalue.
A wave of inflation would undoubtedly boost the price of gold, but increases in both gold prices and production have already increased Goldcorp's earnings per share nearly 150% between 2005 and 2008.
My fellow Fool Brian Orelli noted that it's unlikely that sanofi-aventis' swine flu vaccine will make much noise for the company on the bottom line. Though Baxter International (NYSE: BAX ) is considerably smaller than sanofi, I'd imagine it unlikely that the math changes drastically when we consider its recently announced H1N1 vaccination.
That doesn't mean we should ignore this health-care innovator, though. Moderate sales growth combined with steadily improving margins have put Baxter's trailing-12-month net income a cool 450% above its profit tally in 2004. Management certainly appears to have faith in the future as it just announced a new $2 billion share buyback program.
Green Mountain Coffee Roasters
Let's get right to the important stuff first -- I've had coffee from Green Mountain Coffee Roasters' (Nasdaq: GMCR ) nifty Keurig machine and it's delicious. Now we're not talking Jamaican-Blue-Mountain-in-a-French-press delicious, but it's darn good, cheaper, and requires a lot less work on my part.
Convenience and taste are no doubt two of the major factors behind the incredible growth that Green Mountain has posted in recent years. Though the company threw investors a screwball last week with its big secondary offering, it will be difficult for shareholders to stay upset if it continues to deliver smoking growth.
Spurred by concerns over tax issues, Motley Fool Inside Value recommendation Accenture (NYSE: ACN ) left behind the sandy beaches of Bermuda for the emerald expanses of Ireland. For investors' sakes, I hope that's all that changes because, downturn or not, Accenture has been zipping along quite nicely.
Whether inspired by recession or motivated by profit, businesses around the world are looking to become better, faster, and stronger. And Accenture is one of the chief players helping them get that done. While Accenture has shown good revenue growth, it's also become more efficient itself and notably improved its profit margins.
SunPower (Nasdaq: SPWRA ) reported better-than-expected numbers for its most recent quarter, but with competition from industry giants like Suntech Power (NYSE: STP ) and First Solar, the panel producer has its work cut out for it.
The company has, however, definitely been moving in the right direction. Prior to 2006, it was reporting sizable losses, but it posted close to $100 million in profit last year.
The envelope please ...
The voting is in and CAPS community members have shared their opinions. With a quick wave of the hand, we're going to dismiss both Green Mountain Coffee Roasters and Goldcorp.
While most CAPS members seem to appreciate Green Mountain the company, many don't appreciate the rich valuation that the stock trades for, and the community has given the stock a rock-bottom one-star rating. Two-star Goldcorp, meanwhile, has quite a number of fans on CAPS, but also has caught a bunch of red thumbs from members who think gold is due for a near-term pullback.
SunPower's three-star rating isn't quite enough to put it in the running for the growth-stock crown. Most of the bearish commentary on SunPower has to do with the stock's valuation.
Just missing the top spot this week is Baxter. The stock has an attractive four-star rating on CAPS thanks to members' warm and fuzzy feelings about the defensive nature of the business, the new swine flu vaccine, and the stock's moderate valuation.
And that leaves us with Accenture. Overall, Accenture has received 1,131 outperform ratings, versus just 44 underperform ratings. Why the sea of green thumbs for the consulting giant? Let's take a look at what CAPS All-Star AllStarPortfolio had to say back in May:
ACN (Accenture) – best in class IT consulting and outsourcing company, head and sholders above all its other competitors. The next closest competitor is [IBM (NYSE: IBM ) ]. You can think of them as [Goldman Sachs] of IT consulting in terms of talent.
The polls never close!
Do you think that Accenture has what it takes to be America's next top growth stock? Head over to CAPS and let the rest of the community know what you think.