5 More Top Growth Stocks

If you've read this column much over the past few months, you know that experts believe a growth stock rally is under way here in the U.S.

But can we be sure they're right? I checked our Motley Fool CAPS investor-intelligence database to find out. Sure enough, growth stocks -- that is, firms expected to boost earnings by 20% or more annually over the next five years -- accounted for roughly one-third of the three top-performing CAPS segments of the last 12 months.

Impressed? You should be. But don't let my thumbnail research somehow trick you into thinking of growth stocks as a fad. All-star investors stock up with fast movers over the long haul for three equally important and timeless reasons:

  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 CAPS.

Specifically, we're looking for growth stocks that 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.

Gildan Activewear (NYSE:GIL)

49

49

32.4%

Willbros Group (NYSE:WG)

15

15

32.0%

GSI Commerce (NASDAQ:GSIC)

76

71

30.0%

Smith Micro Software (NASDAQ:SMSI)

341

329

25.0%

RRSat Global Communications (NASDAQ:RRST)

32

32

22.5%

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 of these five, it's Smith Micro that interests me most. I'll let Stan Huber, a CAPS All-Star who goes by the moniker TMFPlatoish1, explain the thesis:

"Smith Micro is a small, rapidly growing provider of middleware to the wireless data communications market. Their original connectivity products sold through Verizon Wireless and other carriers have been augmented with additional products developed from technology garnered through acquisitions. They have recently launched products aimed at wireless music applications, both to allow a consumer to manage audio content between their MP3-enabled phones and their computer, as well as an application that allows carriers to develop music-download stores of their own to compete with iTunes."

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 1,272 out of more than 25,000 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. 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. The Motley Fool's disclosure policy is your portfolio's competitive advantage.


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