5 More Top Growth Stocks

Are you really a growth investor?

It's worth asking. Fast-moving tech stocks have taken a beating recently, leading to a slew of bargains for those with the guts to buy.

No surprises there. Market panics occur daily. Just ask investors who hold shares of biotech BioSante Pharmaceuticals (Nasdaq: BPA  ) , which on Tuesday fell more than 9% on no news whatsoever.

That's why all-star investors bet on growth over the very long term. They 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 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:


No. of CAPS Ratings

Bullish CAPS Ratings

5-Year Growth Estimate





Hardinge (NASDAQ:HDNG)




Wonder Auto Tech. (NASDAQ:WATG)




American Dairy (NYSE:ADY)




National Instruments (NASDAQ:NATI)




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.

At first, I was tempted to go with VASCO, which is one of my best-ever picks for CAPS for all the reasons I offered here. But the stock, up nearly 167% since last summer, isn't the mystery it once was. Nor is it as cheap other fast-moving security data protectors -- Secure Computing (Nasdaq: SCUR  ) , for example.

Measure this
But cheap can be a relative term. For example, even though National Instruments trades for close to 33 times earnings, I can't escape the feeling that the shares are mispriced.

And I'm not the only one. Of the 25 All-Star investors -- that is, those whose picks rank among the top 20% in the CAPS community -- who have rated National Instruments, 23 say the stock is a buy at these levels.

Perhaps that's because those who use the technology like it. Here's how CAPS participant Fireduck put it in August:

As a worker in the IT industry, it is rare to see a company doing things right. Their software development environment (LabView) allows developers to interface with a wide range [of] physical sensors and components. The software is being used a great deal in developmental robotics and autonomous systems. Their data flow programming model could have a huge impact on business data management if it were applied to that area.

I'll add that returns on capital and gross margin have been on a steady northward march since 2004 and free cash flow continues to blossom. Plus, management still owns 28% of the business, which means they've as much at stake as common investors.

To me, those are the marks of a company worthy of further study. Thus, I'll be adding the stock to my CAPS portfolio. But that's me. What would you do? Would you buy National Instruments at current prices? Let us know by signing up for CAPS today. It's 100% free to participate.

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

Read/Post Comments (0) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 547001, ~/Articles/ArticleHandler.aspx, 10/21/2016 1:29:31 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,109.87 -52.48 -0.29%
S&P 500 2,138.35 -2.99 -0.14%
NASD 5,251.40 9.57 0.18%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 1:08 PM
HDNG $10.28 Up +0.01 +0.10%
Hardinge CAPS Rating: ***
NATI $27.34 Down -0.38 -1.37%
National Instrumen… CAPS Rating: *****
SCUR.DL $5.75 Down +0.00 +0.00%
Secure Computing CAPS Rating: *****
VDSI $14.66 Down -0.10 -0.68%
VASCO Data Securit… CAPS Rating: ***