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 2,300% since.

That helped him to overcome stinging losses from Sirius Satellite Radio, 3Dfx, and others to 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 currently contains information on more than 5,200 stocks.

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 more unloved growth stocks:

Company

CAPS Rating

Short Interest

5-Year Growth Estimate

InnerWorkings (NASDAQ:INWK)

**

35.6%

36.0%

Evergreen Solar (NASDAQ:ESLR)

**

16.2%

35.0%

Fossil (NASDAQ:FOSL)

**

7.4%

19.1%

Delta Petroleum (NASDAQ:DPTR)

**

12.7%

28.0%

Spansion (NASDAQ:SPSN)

**

9.9%

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.

I'm sorely tempted to make Fossil my top pick this week. At the very least, CEO Kosta Kartsotis deserves kudos. He was buying shares of the watchmaker in early 2006, at $20.29 a share. The stock has since doubled. I never thought I'd see the day.

Crow, meet mouth. Mouth, crow. (Chomping sounds.)

With a 1.30 PEG ratio and steadily improving returns on capital, Fossil could still have room to run. Then again, the gains could be temporary, just as they were for Crocs (Nasdaq: CROX  ) . I'd rather go with memory maker Spansion.

My memory won't fail me
Sound crazy? You'd think so. Spansion is in a margin-crushing commodity business. And its primary competitors -- Samsung and Intel (Nasdaq: INTC  ) -- aren't the kind to show mercy. Memory prices have been falling for months now.

Yet, as bad as all that is, we can be reasonably assured that there will continue to be demand for memory chips, especially high-performance memory chips. Spansion is aggressively pursuing that market with new products.

Here's how CAPS investor tekrider put it last December:

[Spansion] already achieved a dominant position in NOR and its lead over its competition is increasing due to its excellent execution both in technology development and manufacturing prowess. NAND will not replace NOR because its emulation of NOR functionality is not economical. However, there is potential in [Spansion's] ORNAND technology to grab some of NAND's market -- although that remains to be seen.

I'll add that, with the stock trading for 50% of its tangible book value, there doesn't appear to be much downside risk for investors viewing this as an informed speculation.

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 unloved growth stocks.


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