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You don't need the investing acumen of Warren Buffett or the riches of a trust fund baby to achieve financial success.

Since the stock market is your best hope for realizing your dreams, start investing today, by putting away small sums of money every month. Then seek out undervalued small-cap stocks for your greatest returns. I like these stocks because they offer opportunities for growth, while still being mostly overlooked by the big investors.

To find these future giants, we'll screen for stocks with market values less than $3 billion, an earnings surprise of 15% or more in the previous quarter, and forecasts for long-term earnings growth potential of at least 15%. We'll filter our findings through the collective investing wisdom of the 170,000 members in our Motley Fool CAPS community. If the best and brightest CAPS players think these stocks hold potential, we ought to take notice, too.

Here are some of the stocks this simple screen found:


Market Cap

EPS Surprise

Avg. Analyst 5-Yr EPS Est.

CAPS Rating (out of 5)

Cray (Nasdaq: CRAY  ) $266 million ($0.19) vs. ($0.62) 18% **
Crocs (Nasdaq: CROX  ) $1.2 billion $0.37 vs. $0.22 15% *
Tesoro (NYSE: TSO  ) $2.1 billion $0.30 vs. $0.20 63% ****

Sources: Yahoo! Finance and Motley Fool CAPS.

Of course, this is not a list of stocks to buy -- just a starting point for more research. We need to look more closely at these companies to see whether analysts' faith in them is well-founded. Still, since the CAPS community's helping us out, their favorite selections might be a good place to begin.

An alternative opportunity
If you're familiar with Cray for anything, it's that its name is synonymous with supercomputers and came out on top of a biannual ranking of system suppliers using standard benchmark tests. Yet when the new list is unveiled next month, China may actually surpass Cray, though U.S. computer makers including IBM (NYSE: IBM  ) and Oracle's (Nasdaq: ORCL  ) Sun Microsystems dominate the top 10 list.

Yet, Cray saw revenues drop 46% to $28.7 million last quarter on lower volumes. Perhaps customers were waiting for its newest computer, the XE6 supercomputer. For example, Sweden's Royal Institute of Technology recently upgraded its order for a Cray supercomputer from the XTM system to the XE6.

With 83% of the CAPS members rating Cray to outperform the market, seems they've been using supercomputers to calculate the odds of it recording the bulk of its projected $325 million later in the year.

You can compute whether Cray is right for your portfolio by adding it your My Watchlist page and have all the Foolish news and analysis about this stock aggregated in one place.

I'll drink to that
Recently, my Foolish colleague Alyce Lomax asked if toning shoes from Skechers (NYSE: SKX  ) and Reebok will be the next fad like Crocs and Heelys. What she may not have realized was that Crocs was going to be joining the fad, introducing its own plastic toning clog, along with new tennis shoes, loafers, flats, and heels. But it's also expanding beyond just its patented Croslite plastic and will introduce styles made of leather, canvas, and more.

Crocs has managed to turn its business around and the new styles show a more broad-based campaign for growth. But as it moves beyond fad to become more of a traditional shoe company, investors will need to value it as such and compare it to the likes of Nike and even Brown Shoe.

Highly rated CAPS All-Star BrodieMan720 says he sees Crocs as being on track to showing better results ahead:

It seems like management's a little bit better on track. Whatever debt they have isn't that big of a deal because they have the cash from operating activities to wipe it out if they needed to. Hopefully it's smart leveraging. Anyhoo...they seem to be on track with previous years QTD revenue, so hopefully the can continue that trend. If so, they just need to figure out how to cut operating expenses so EPS can rise.

Man the ramparts
Focusing on the western region of the country, Tesoro was able to return to profitability in the second quarter and avoid the hits refiners like Western Refining (NYSE: WNR  ) suffered when east coast demand collapsed causing it to suspend operations at its refinery in Yorktown. With peak demand season behind us, though, refiners in general might find the immediate future fraught with uncertainty.

Tesoro has also suffered from the fallout from an explosion at one of its refineries back in April, and it was fined $2.4 million for the incident that killed seven workers.

Yet 94% of CAPS members rating Tesoro believe it will be able to refine its results further and continue posting market-beating results. You can add your opinion on the Tesoro CAPS page on whether it can still offer up outperformance.

Foolish final thoughts
Stock investing is not brain surgery. Finding good, undervalued companies is not as difficult as the professionals want you to think. You just have to commit to starting now, and do so regularly. Now's the time to begin!

Nike is a Motley Fool Stock Advisor selection. The Fool owns shares of International Business Machines and Oracle. Try any of our Foolish newsletter services free for 30 days.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Fool contributor Rich Duprey currently does not own any stocks as you can see here. The Motley Fool has a disclosure policy.

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Related Tickers

10/21/2016 4:00 PM
CRAY $21.09 Down -0.23 -1.08%
Cray CAPS Rating: *****
CROX $7.86 Down -0.20 -2.48%
Crocs CAPS Rating: **
IBM $149.63 Down -1.89 -1.25%
IBM CAPS Rating: ****
ORCL $37.93 Down -0.16 -0.42%
Oracle CAPS Rating: ****
SKX $18.98 Down -3.96 -17.26%
Skechers CAPS Rating: *****
TSO $81.80 Up +0.95 +1.18%
Tesoro CAPS Rating: ***
WNR $30.61 Up +1.86 +6.47%
Western Refining CAPS Rating: ****