5 Top Tweeners

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

Neither up-and-coming superstars nor dominant veterans, tweeners are poised precariously in between. They're not as hot as they once were, and they're vulnerable to both young upstarts and old stalwarts. But they've honed their skills enough to remain a force to be reckoned with.

The stock market has plenty of tweeners. They'll either create billion-dollar fortunes as they come to dominate industries, as Cisco (Nasdaq: CSCO  ) and Microsoft have, or they'll be destroyed in the process, as Gateway almost was. That's the problem -- investing in tweeners can be dangerous and exceptionally profitable. By picking his winners well, David Gardner produced nine years of 20% average returns hunting for misunderstood multibaggers in the making. His team at Motley Fool Rule Breakers continues the tradition today.

Let's have the list
You, too, can join in the effort, thanks to Motley Fool CAPS. Each week, we'll 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 are the latest contenders:


CAPS Rating (out of 5)

5-Year Growth Estimate

American Oriental Bioengineering (NYSE:AOB)



Power Integrations (NASDAQ:POWI)



Citrix Systems (NASDAQ:CTXS)



Best Buy (NYSE:BBY)



Chartered Semiconductor (NASDAQ:CHRT)



Sources: Motley Fool CAPS, Yahoo! Finance.

Bear in mind that this isn't a list of recommendations -- merely candidates for further research.

No doubt you're expecting me to pick Best Buy. (How do you not pick "Best Buy" in an article about best buys?) Trouble is, consumers are acting as if Fed chief Ben Bernanke should be fitted for a Darth Vader outfit. Well, also, January alone offered plenty of evidence that the retailer would be one of 2008's worst stocks.

Chartered Semiconductor, which operates a large and growing business for the outsourced development of semiconductors, should be a buy with all the manufacturing work moving offshore. Trouble is, Chartered is well behind top foundry Taiwan Semiconductor (NYSE: TSM  ) .

Does your portfolio have the power?
Power Integrations is exactly the sort of business that outsources its chip designs, which -- surprise! -- help to conserve power.

Boring, you say? Perhaps. But there's big money in this business. The company says its EcoSmart power-management chips have produced more than $2 billion in savings since 1998.

Power Integrations is flush as a result. Free cash flow blossomed to $51.7 million last year, up almost threefold from 2006. Cash and investments, meanwhile, equaled more than $200 million, or roughly one-quarter of the firm's going market value.

I can't see how that's fair. Nor, apparently, can top institutional investors. Recent buyers of Power Integrations include Jason Votruba of UMB Scout Small Cap (UMBHX) and Kevin O'Boyle of Presidio (PRSDX).

My guess is that they've spotted a winner early in its run. But that's my take. What's yours? Would you buy Power Integrations at current prices? Let us know by signing up for CAPS now. It's 100% free to participate.

See you back here next week for five more top tweeners.

Read/Post Comments (0) | Recommend This Article (4)

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: 595955, ~/Articles/ArticleHandler.aspx, 10/26/2016 5:54:08 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 18,199.33 30.06 0.17%
S&P 500 2,139.43 -3.73 -0.17%
NASD 5,250.27 -33.13 -0.63%

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

10/26/2016 4:00 PM
POWI $63.80 Up +0.45 +0.71%
Power Integrations CAPS Rating: *****
BBY $39.29 Up +0.03 +0.08%
Best Buy CAPS Rating: *
CHRT $19.01 Down +0.00 +0.00%
Chartered Semicond… CAPS Rating: **
CSCO $30.55 Up +0.21 +0.69%
Cisco Systems CAPS Rating: ****
CTXS $83.90 Down -1.00 -1.18%
Citrix Systems CAPS Rating: ****
TSM $31.21 Down -0.34 -1.08%
Taiwan Semiconduct… CAPS Rating: ****