5 More Top Growth Stocks

Are you really a growth investor?

It's worth asking. Even though talk of a growth-stock rally has spread to the pages of The Wall Street Journal, investing in fast movers can be a stomach churning-experience.

Today offers a good example. News of a larger-than-expected drop in durable goods orders has investors skittish and the Dow falling. High-growth stocks, meanwhile, are getting obliterated.

Crocs (Nasdaq: CROX  ) is near the top of the casualty list, down more than 4% as I write today. Perhaps skeptics like me are wondering whether the Colorado clog maker has finally peaked?

Perhaps, but the stock has been a stellar performer for growth guru Will Danoff, whose Fidelity Contrafund remains among Crocs' top institutional owners. How unsurprising. Danoff and all-star investors like him know that:

  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 seeks 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 our Motley Fool CAPS investor-intelligence database.

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

Let's have the list
Here are five more top growth stocks:

Company

No. of CAPS Ratings

Bullish CAPS Ratings

5-Year Growth Estimate

Digimarc (NASDAQ:DMRC)

38

36

27.5%

Warner Chilcott (NASDAQ:WCRX)

50

46

21%

SPSS (NASDAQ:SPSS)

79

75

23.6%

Microsemi (NASDAQ:MSCC)

60

56

20.9%

NovAtel (NASDAQ:NGPS)

134

132

20%

Source: 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, SPSS interests me most.

Here's how CAPS All-Star PearlandTX describes its thesis:

After using their software on various marketing projects, I am very impressed with their product. SPSS is powerful and easy to use. Marketing profession is under increasing pressure to make decisions based on deep analysis. Stock is significantly below one-year high. Most likely scenario is that they will be acquired by an ERP or CRM software firm.

Intrigued? Do your own due diligence, then check in with thousands of other investors at CAPS. 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, ranked 2,201 out of more than 31,000 rated investors 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 article at the time of publication. Tim's portfolio holdings can be found at his 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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