5 Top Tweeners

If you've ever sought to get seriously rich from stocks, then you've owned a tweener.

A tweener, dear Fool, is like your pal Chuck. Still a great athlete, Chuck no longer rules the hardwood with his 40-inch vertical leap. He's become what we sports addicts call a gamer. He passes more. He's developed a nice shot from the corner. And although he doesn't dunk as often, or as spectacularly, as he once did, Chuck is still a force in the paint.

What we fans don't know is how long Chuck will be in the starting lineup. Chiseled veteran Abe has a wicked hook shot that won't quit. And Larry, the little guard whose hip-shaking moves smoke defenders, has the makings of a superstar. Both are vying to cut into Chuck's minutes on the floor.

In Foolish parlance: Chuck is a tweener, Abe is a Rule Maker, and Larry is a Rule Breaker.

Growing up is hard to do
The stock market has plenty of Chucks. They'll either create billion-dollar fortunes that dominate industries, as Cisco and Microsoft have, or they'll be destroyed in the process, as Gateway was.

Therein lies the problem. Investing in tweeners can be dangerous and  exceptionally profitable -- the trick is picking your winners well, as David Gardner has. He produced nine years of 20% average returns hunting for misunderstood multibaggers in the making. His team at Motley Fool Rule Breakers continues that tradition today.

Let's have the list
You, too, can join in the effort, thanks to Motley Fool CAPS. Each week we use the database to find three-star stocks that are expected to boost earnings by at least 15% annually over the next five years. Here is today's list:

Company

CAPS Rating

5-Year
Growth Estimate

MGI Pharma (NASDAQ:MOGN)

***

37.5%

Yahoo! (NASDAQ:YHOO)

***

24.6%

Electronic Arts (NASDAQ:ERTS)

***

23.1%

L-1 Identity Solutions (NYSE:ID)

***

20.0%

CarMax (NYSE:KMX)

***

18.0%

Sources: Motley Fool CAPS, Yahoo! Finance.

Bear in mind that this is not a list of recommendations. Instead, I offer these stocks as candidates for further research. But of these five, it's not Yahoo! that interests me most.

Don't be surprised. I'm under zero obligation to shill for this Stock Advisor selection, and I won't. You know why. When it comes to The Next Big Thing on the Web -- advertising -- Google (Nasdaq: GOOG  ) beats all comers, hands down. Just ask IAC/InterActive (Nasdaq: IACI  ) CEO Barry Diller.

Paint me a picture, Electronic Arts
So who's my favorite? Electronic Arts.

Yes -- before you ask, I am the guy who argued against EA in a September duel with fellow Fool Rick Munarriz. As I said then, EA is expensive; its 2.16 PEG ratio confirms it for me. (1.0 equals fairly valued, in most cases.)

Nevertheless, I'm compelled to admit that EA's gaming franchises are impressive. CAPS investor jakkal explains:

Besides their tried and true franchises that continue to make money (Madden, SimCity, The Sims, Need for Speed, among others) it has a great slate of games coming up. First up is easily a 2008 Game of the Year candidate and Will Wright's new masterpiece. The previews have wowed the gaming community and the constant delays have driven it to a frenzy just waiting for the release. This game will be huge and nothing short of sensational for the stock.

It hasn't caused any riots yet, but I get the point: EA's game design has rarely been better.

Neither has production been better. Turns out that my primary criticism of EA -- it missed a chance to jump on the bandwagon for Nintendo's Wii -- has been alleviated. In just one quarter. That's impressive.

But don't take my word for it. Do your own due diligence, and 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.

Meet me back here next week for five more top tweeners.


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