Amass a Fortune With These Stocks

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

Small sums of money invested monthly in undervalued small-cap stocks offer hope for your greatest returns. They offer the best growth opportunities for growth because they're mostly ignored by the big investors.

Below we screen for stocks under $3 billion in market cap, offering earnings surprises of 15% or more in the previous quarter, with long-term earnings growth forecast to be at least 15%. We'll then filter our findings through the collective investing wisdom of the 180,000 members in our Motley Fool CAPS community.

Here are two of the stocks this simple screen found:

Company	Market Cap	EPS Act. vs. Est.	Avg. Analyst 5-Year EPS Est.	CAPS Rating (out of 5)
8x8 (Nasdaq: EGHT  )	$292 million	33%	26%	***
Pacific Biosciences (Nasdaq: PACB  )	$213 million	24%	30%	***

Source: Yahoo.com 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.

It's all in the genes
A key to success is not only growing sales, but also retaining customers. Netflix (Nasdaq: NFLX  ) has recently been one company able to post higher revenue (and profit!) numbers, but it is seeing turnover in its customers increase as a result of dissatisfaction with its pricing plan. It lost more than 800,000 net subscribers last quarter and the stock trades two-thirds lower than it did at its recent highs.

At the other end of the spectrum, enterprise-level VoIP provider 8x8 also posted record revenues and profits, but highlighted that customer churn sank to its lowest level ever, just 2%, ending the quarter with more than 27,000 business customers.

I noted recently that 8x8 chose a different path than that pursued by Vonage and magicJack VocalTec, which chose to focus on consumers and for the most part eschew the business community. Yet 8x8 is successful because it's not just about making phone calls over the Internet, but also about delivering cloud-based SaaS applications to businesses that have employees anywhere in the world. Previously, it focused on just small and midsized businesses, but it has recently broadened its horizons by going after large clients as well.

I still think there's a heightened level of risk in pursuing the growth by acquisition strategy, as the VoIP specialist is doing, but sometimes some companies are able to overcome the obstacles and 8x8's quarter would certainly seem to point to it being one of the exceptions to the rule.

It's one of the reasons I rated it on CAPS to outperform the broad indexes, but tell us on the 8x8 CAPS page if you agree it's got a long runway of growth ahead of it, then add the stock to your watchlist to see how it turns out.

Burned-out bulbs
The unpredictable funding environment for research and development previously led gene sequencing specialist Illumina (Nasdaq: ILMN  ) to badly miss expectations and caused Pacific Biosciences to announce it was laying off more than a quarter of its staff.

Life Technologies (Nasdaq: LIFE  ) was also suffering through the loss of a third of its market value, but then it announced a breakthrough technological advancement, a gene sequencing device that could map the human genome in a day for under $1,000. Shares have rebounded sharply in the weeks since the announcement.

PacBio is just getting up to speed on being a commercial-stage company, having only launched its first gene sequencing system last March. It had recognized $9.8 million in sales last quarter, but has a backlog that's double that, representing 27 systems that would almost double those recognized over the course of the first half of the year. It was unfortunate it was coming to market at just the time funding was drying up all over the place, but the Life Technologies development may spark renewed interest and PacBio could end up being a beneficiary.

That's why I just went and rated it on CAPS to outperform the market, joining the 73 All-Star members, 93% of those weighing in, in thinking it can beat the Street. Add Pacific Biosciences to your watchlist and tell us in the comments section below if you think it can split the difference and generate future growth.

Foolish final thoughts

These companies have the odds stacked against them, but The Motley Fool has identified two stocks that are also facing difficult times yet still grow revenues hand over fist. The report is free, but it's only available for a short time, so ask for your copy today and find out the two cash kings that are changing the face of their industry.