Wednesday's Top 5 Growth Winners

Ask cheapskate value investors to buy a stock that's achieved a new 52-week high and you'll get one of two responses:

1. Hysterical laughter.
2. Sudden nausea.

Pity them, Fool.

How many times has Priceline.com (NASDAQ:PCLN) touched a new 52-week high on its way to becoming a five-bagger in three years? Too many to count, of course.

Let that be a lesson. Rocket stocks -- that is, high-growth stocks that are also realizing heavy price appreciation -- are sometimes worth buying.

Rocket stocks, not rocket science
And sometimes they're worth buying in bulk. Think of Baidu.com. My buddy Rick Munarriz recommended China's top search engine to our Rule Breakers subscribers at $83.37 in October of last year.

I thought he was nuts. I mean it. The stock was both expensive and on a tear. So I argued against buying it in a January duel here at Fool.com. Now Baidu is a four-bagger. How I wish I had listened to what Rick was telling me all those months ago.

Don't do as I did. Never assume an expensive stock is too expensive. What looks like a cliff could really be base camp on a climb towards the summit of Everest. Each day in this column, with the help of the 76,000 pro and amateur stock pickers in our Motley Fool CAPS community, we'll seek to find those still climbing.

Our candidates will be found daily in the 52-week high lists at The Wall Street Journal. But few highfliers will make the cut; we're looking for stocks expected to boost net income by at least 15% annually over the next five years and which earn at least two of five stars from our CAPS contingent.

Here are today's candidates for your consideration:

Our mostly small-cap list features some promising, though speculative, stocks. Yet these tiny titans can create astounding returns if bought before they get discovered.

Witness Chicago Bridge & Iron, which has been the target of some excellent investors this year. They've been paid handsomely; the stock is up more than 95% over the past 52 weeks, easily besting the 5% the S&P 500 has put up over the same period.

Can you see HDFC?
So far, HDFC, a full-service banker in India, hasn't kept pace. It's up just 68% since Motley Fool Global Gains lead advisor Bill Mann's July issue recommendation. What a shame. (Cue violin.)

I'm joking, of course. There's really no telling how long this bank will remain on the down-low. Only three U.S. analysts cover its American Depository Receipts -- a far cry from the 21 that cover Wachovia (NYSE:WB) and the 19 that cover Washington Mutual.

But that won't last. HDFC's numbers are simply too good. Quoting Bill's write-up:

This is a best-of-breed bank that has grown earnings per share almost 30% per year since its founding in a country that I expect to post at least one 10%-plus GDP growth rate in the next decade. I anticipate that loan growth will exceed 30% again in 2008, and my conversation with management tells me they are comfortable with this rate.

HDFC, Wachovia, and Washington Mutual all have similar interest margins, but HDFC is expected to grow earnings almost four times faster than those peers. I'm adding the stock to my CAPS portfolio.

But that's my take. What's yours? Would you buy HDFC at today's prices? Let us know by signing up for CAPS now. It's 100% free to participate.

I'll be back here tomorrow with more rocket stocks.