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 another good example. Each of the major indexes was declining on comments from Fed Chairman Ben Bernanke, who told Congress that full-year growth would come in lower than expected. High-growth tech stocks, which can hold up well in slowing economies, were meaninglessly dragged down with the rest.

Web infrastructure provider F5 Networks (Nasdaq: FFIV  ) , for example, was down 3% in early trading. I can't find a single piece of news that explains why. But I can tell you that superior investors have been piling into this market-beating stock, including Will Danoff of Fidelity Contrafund (FCNTX). Surprised? Don't be. All-star investors like Danoff 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 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 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
Now, with that preamble behind us, here are five more top growth stocks:

Company

No. of CAPS Ratings

Bullish CAPS Ratings

5-Year Growth Estimate

Northgate Minerals (AMEX:NXG)

845

824

46.0%

Range Resources (NYSE:RRC)

85

82

22.4%

BJ Services (NYSE:BJS)

370

363

20.7%

Cal Dive International (NYSE:DVR)

228

225

20.0%

First Cash Financial Services (NASDAQ:FCFS)

288

285

20.0%

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, it's gold and copper miner Northgate Minerals that interests me most. I'll let All-Star CAPS investor pencils2 explain the thesis:

With the fact that we'd have a six bagger if NXG hit the industry average P/E (which is above 30), I just like the upside. If they grow earnings by 15% annually for the next five years ... and are priced with an extremely reasonable P/E of 10 in five years, the price would be $11.28, close to a quadruple from today's prices. This company isn't going anywhere short-term with [a] strong balance sheet and strong margins, so I think it is well worth the risk for the long-term.

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.

Tim Beyers, who is ranked 2,119 out of more than 60,000 participants in CAPS, is a regular contributor to Fool.com and Rule Breakers. Tim didn't own shares in any of the companies mentioned in this article at the time of publication. Find Tim's portfolio here and his latest blog commentary here. The Motley Fool's disclosure policy is your portfolio's competitive advantage.


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