5 More Unloved Growth Stocks

Ah, skepticism, how I love thee.

We rebel investors at Motley Fool Rule Breakers believe the multibaggers in the making, while not often cheap by the numbers, are always misunderstood. As such, they face extraordinary skepticism, which, in turn, makes them excellent value stocks.

More are out there. Each week, right here in this column, we'll hunt them down. Grab your keyboard.

What one stock can do for you
Really, it's worth your time. One home run stock can make all the difference to your portfolio.

Just ask David Gardner, captain of the good pirate ship Rule Breakers, who bought Amazon at a split adjusted price of $3.24 a share in 1997. He's up more than 2,700% since.

That helped him overcome stinging losses from Sirius Satellite Radio, 3Dfx, and others, and put up nine years of better than 20% average annual returns as the leader of the real-money Rule Breaker portfolio.

Let the haters be your friends
Today, David and his team still seek misunderstood growers. You can, too, with the help of our completely free Motley Fool CAPS investor-intelligence database, which contains information on more than 5,000 stocks and has more than 65,000 members.

CAPS applies user input to rate stocks from one (low) to five (high) stars. Using CAPS, we're once again going to search for one- and two-star stocks that have at least 5% of their available shares sold short, but are expected to grow their earnings by no less than 15% over each of the next five years.

Let's have the list
With that preamble behind us, here are five unloved growth stocks:

Company

CAPS Rating

Short Interest

5-Year Growth Estimate

OSI Pharmaceuticals (NASDAQ:OSIP)

**

12.20%

25.6%

Wind River Systems (NASDAQ:WIND)

**

8.30%

20.0%

Novellus Systems (NASDAQ:NVLS)

**

5.90%

18.2%

Heidrick & Struggles (NASDAQ:HSII)

**

10.70%

15.0%

Celera Group (NYSE:CRA)

**

7.10%

15.0%

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.

This time, I'm partial to biotech OSI. Valuation has something to do with it. A dollar of OSI's revenue costs investors just $4.72, well below the biotech industry average of $15.74. And its 0.94 PEG ratio suggests that OSI is no worse than fairly valued and could be cheap.

Others like the long-term potential for its drugs. CAPS investor NetscribeBiotech explains:

OSI Pharmaceutical is looking to position itself as a specialty player in the oncology market through its drug Tarceva, which has booked global sales worth $650 million in 2006 alone. The company's partnership with Genentech (NYSE: DNA  ) and Roche to market Tarceva in the U.S markets and international markets respectively has done wonders. To add on to this Tarceva has been approved in 69 countries to treat advanced non-small cell lung cancer (NSCLC) and in 42 countries to treat pancreatic cancer as of January 2007 ... Tarceva could become a blockbuster compound in the future.

Intrigued? Do your own due diligence and then check in with tens of thousands of other investors at CAPS. Feel free to 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. 

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


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