5 More Top Growth Stocks

Are you really a growth investor?

It's a question 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 GameStop (NYSE: GME  ) , which yesterday fell more than 3%. It's down again today on no news whatsoever. Sheesh.

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

How we do it
Of course, not all growth stocks will do. Our weekly hunt seeks 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 which are expected to grow their earnings by at least 20% annually over the next five years. Five-star stocks are those that the collective CAPS community believes will outperform the S&P 500.

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

Company

No. of CAPS Ratings

Bullish CAPS Ratings

5-Year Growth Estimate

Amtech Systems (NASDAQ:ASYS)

110

109

40.0%

Mindray Medical (NYSE:MR)

963

944

37.0%

Somanetics (NASDAQ:SMTS)

115

113

25.5%

Satyam Computer (NYSE:SAY)

831

818

22.0%

Fundtech (NASDAQ:FNDT)

59

59

20.0%

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.

At first, I was tempted by Satyam Computer, an Indian IT consultant whose 0.91 PEG ratio nearly matches those of larger rivals Infosys (Nasdaq: INFY  ) and Wipro. The difference? At $8.6 billion in market value, Satyam is worth less than half what its peers command, making it a better candidate to double over the next three years.

A ray of hope for your portfolio
But today, I prefer Chinese medical-device maker Mindray Medical, for the same reasons that David recommended the stock in the March 2007 issue of Rule Breakers:

It's the net margins where Mindray really shines ... Mindray isn't slashing prices and undercutting its own profits -- indeed, it appears it could bring prices down further if management thought that would help to gain market share.

CAPS investor jimdcraig reiterated David's thesis last month. His pitch:

Medical device manufacturer has [a] better cost structure than competitors. At the same time it has demonstrated time and time again that it can come up with technology good enough for the U.S. market. Strong management keeps beating forecasts.

I'll add that margins have been on the rise since 2005, while returns on equity and capital have remained solidly in the double digits. To me, that's the mark of a great business with better years, and better returns, still ahead.

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

See you back here next week with five more top growth stocks. Fool on!


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