7 Stocks With Growth on the Menu

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If I asked you to cook up the ideal company, what would you say? No, no, I'm not asking you to tick off your favorite members of the Fortune 500 or some up-and-comer small cap that you've just found. I want you to think about the ingredients you'd give a company if you could dream it right into existence.

Would it be in a particular industry? Would it be services- or product-based? Would it have fat profit margins, or would it make its money by doing a huge volume?

We could spend all day going over the details of this magnifique stock market dish, but I'd guess that there is at least one ingredient that we'd all add liberally to our creation: growth. All those other details are great, but how interesting can a business be if it's stagnating, bereft of avenues for expansion?

I've dug up a handful of companies that actually exist, and which are expected to post significant growth in the years to come. These companies may not all be the picture of perfection, but I've also consulted the 140,000 members of the Motley Fool's CAPS community to get an idea of which are our best bets.

Company	Expected Long-Term Growth	Forward Price-to-Earnings Ratio	CAPS Rating (out of 5)
First Solar (Nasdaq: FSLR)	33%	20	**
Starbucks (Nasdaq: SBUX)	16%	22	**
Netgear (Nasdaq: NTGR)	15%	26	*****
Dolby Laboratories (NYSE: DLB)	14%	22	*****
Fluor (NYSE: FLR)	13%	13	*****
Emerson Electric (NYSE: EMR)	12%	20	*****
Philip Morris International (NYSE: PM)	10%	14	*****

Source: Capital IQ (a division of Standard & Poor's), Yahoo! Finance, and CAPS.

While these aren't meant to be formal recommendations, they could be a great place to kick off further research. In fact, let's dig in a bit further on Motley Fool Stock Advisor pick Dolby Laboratories.

What makes Dolby so tasty?
There are so many reasons to like Dolby that it can be difficult to find a starting point. But let's try. The company's sound technology is ubiquitous. For instance, I just happened to have a Rodrigo y Gabriela CD on my desk and, lo and behold, what do I find on the back cover? You guessed it, a Dolby Digital logo. I could probably find the same logo associated with most of the entertainment products I have in my house.

But the company doesn't make CDs, DVDs, or televisions. Instead, it creates the technology to produce killer sound, and then licenses that technology to content creators and distributors, as well as consumer electronics manufacturers. Heck, Dolby's Dolby Digital technology is even written into the industry standards for Blu-ray players.

If you think that business model sounds very capital-light, then you're right on the money, which brings us to another fantastic feature of Dolby. The company is able to pump out a very healthy amount of cash from its operations, and it needs to invest very little of that back into the business -- even as it's growing. It shouldn't be too surprising, then, that the company also has a spic-and-span balance sheet, with next to no debt and more than $700 million in cash.

Perfection or poser?
As attractive as Dolby's business and financials are, it's hard to say that the stock is overly cheap. For investors to pocket a good return at today's prices, the company would have to actually achieve the growth that analysts are expecting. That may not be too high of a bar for the company, though, considering it averaged 43% annual earnings-per-share growth between its 2005 and 2009 fiscal years.

CAPS members certainly seem to think that this kind of growth is achievable. Of more than 3,200 weighing in on Dolby's stock, 3,185 have rated it an outperformer.

One of those Dolby bulls is one of CAPS' top-rated members, pencils2. He gave the stock a thumbs-up way back in September 2006, saying:

They are a leader in a growing market that will become pretty darn big over the next 15-20 years, and they have good management with strong insider ownership, increasing margins, more than $400 million in cash with a very small amount of debt, and strong asset growth. I see a lot of pluses and not too many negatives that will affect the long-term performance of Dolby, and I have confidence that they will be able to take full advantage of the great opportunity they have in front of them.

Even though this pitch was made more than three years ago, it holds very true today. In fact, the only thing that's materially different is that the company has increased its cash balance by about $300 million.

I've already given Dolby's stock a thumbs-up in my CAPS portfolio, so now I want to know what you think. Share your thoughts in the comments section below or, better still, head over to CAPS and share your opinion with the entire community.

Fellow Fool Paul Elliot knows that sometimes, going after the market's hottest opportunities takes more than capital. It takes guts.