5 More Top Growth Stocks

Here's an interesting statistic: Even though value stocks have done better than growth stocks for seven consecutive years, it wasn't until 2006 that turtles produced enough total return to catch the hares that pounded them from 1996 to 1999.

Or, put simply, it took value twice as long to produce the same returns as growth.

That doesn't mean you ought to eschew value investing. Far from it! But does it mean you should add some high octane to your portfolio, as all-star investors do. They bet on growth over the long haul because:

1. Businesses that make investors billions always begin as growth stocks.
2. The best of them feature massive and identifiable competitive advantages.
3. Growth as a strategy has the capacity to deliver 20% or greater annual returns for decades at a time.

How we do it
Of course, not all growth stocks will do. Our weekly hunt is for the next great multibagger. But unlike David Gardner and his team at Motley Fool Rule Breakers, who scour everything from financial statements to trade magazines to clinical reports in their research, we're going to rely on the Motley Fool CAPS investor intelligence database.

Specifically, we're looking for stocks that are expected to grow earnings by an average of at least 20% annually over the next five years and which have earned a five-star rating in CAPS. Five-star stocks are those that the community, on the whole, believes will outperform the S&P 500.

Let's have the list
Now, with that preamble behind us, here are five more top growth stocks:

Company

No. of CAPS Ratings

Bullish CAPS Ratings

5-Year Growth Est.

Amerigon (Nasdaq: ARGN  )

135

132

40.0%

ICT Group (Nasdaq: ICTG  )

20

20

23.0%

FormFactor (Nasdaq: FORM  )

300

295

23.0%

Syntel (Nasdaq: SYNT  )

35

35

22.5%

LoJack (Nasdaq: LOJN  )

150

147

20.0%

Sources: Motley Fool CAPS, Yahoo! Finance

Bear in mind that this isn't a list of recommendations. Instead, I offer these stocks as candidates for further research. But it's LoJack that strikes me as most interesting. Why? First, the stock trades for 18 times this year's earnings, or slightly less than its long-term projected growth rate.

Then there's this pitch from top-rated CAPS investor Selzhanik, who writes, "[LoJack] enjoys having the name recognition that defines the industry, like Coke or Kleenex. Recently they partnered to deploy their name and technology to laptop computers with 'LoJack for Laptops.' They've also partnered with Ryder [to] deploy their solution to commercial trucks. They control costs and enjoy fantastic profitability, with operating margins in the top 5% of companies in the Security Systems and Services industry. They have little debt, great return on equity, and great growth for the industry."

Intrigued? Do your own due diligence and then check in with thousands of other investors at CAPS. And, if you'd like, add your own commentary. You'll be helping your fellow Fools and testing your ideas at the same time. Click here to get started now; the service is 100% free.

See you back here next week for five more top growth stocks.

Fool contributor Tim Beyers, who is ranked 591 out of more than 23,000 in CAPS, is a sucker for growth stocks and a regular contributor to Rule Breakers. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. All of his portfolio holdings can be found at Tim's Fool profile. His thoughts on growth stocks, Foolishness, and investing in general may be found in his blog. FormFactor is a Motley Fool Hidden Gems pick. The Motley Fool's disclosure policy is your portfolio's competitive advantage.


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Related Tickers

8/29/2014 3:59 PM
FORM $7.04 Up +0.17 +2.47%
FormFactor CAPS Rating: ****
LOJN $4.00 Up +0.10 +2.56%
LoJack Corp CAPS Rating: **
SYNT $89.37 Up +0.27 +0.30%
Syntel, Inc. CAPS Rating: *****

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