5 Top Tweeners

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

Neither an up-and-coming superstar nor a dominant veteran, tweeners are poised precariously in between. They're not as hot as they once were, and they're vulnerable both to 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 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:

Company

CAPS Rating (Out of 5)

5-Year Growth Estimate

VMWare (Nasdaq: VMW  )

***

44.2%

GSI Commerce (Nasdaq: GSIC  )

***

27.8%

Lindsay Corp. (NYSE: LNN  )

***

20.0%

CNET (Nasdaq: CNET  )

***

16.0%

Hain Celestial (Nasdaq: HAIN  )

***

15.5%

Sources: Motley Fool CAPS, Yahoo! Finance.

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

Not a bad group, eh? Rule Breakers recommendation CNET has seen better days, but it may be improving now that activist investors are demanding more of management.

Virtually guaranteed?
Even so, I still like virtualization specialist VMWare. And not just because of its technology, which helps to make data centers -- and, thereby, networked computing -- more efficient.

Nope. I like VMWare because it's the same company it was in December, only cheaper. And I'm not the only one who thinks so. CAPS All-Star tuffsledding wrote this in February:

Now that it is priced reasonably, this stock represents a great growth opportunity at a reasonable price. High-risk, potentially very high reward situation. I am not too risk averse with play money and even have put in a real world limit buy order.

He made that pick at $58.16 a share, an 11% premium over today's levels. Which, of course, begs the question: If VMWare was priced reasonably at $58 a share, then isn't it really cheap  today?

A 1.15 PEG ratio based on projected 2008 earnings says "yes."

But that's my take. What's yours? Would you buy VMWare 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.

How great is growth? Ten stocks in the market-beating Rule Breakers portfolio have at least doubled. Discover all of their identities with a 30-day guest pass to the service. There's no obligation to subscribe.

Microsoft is an Inside Value pick. CNET is a Rule Breakers choice.

Tim Beyers , who is ranked 16,398 out of more than 96,000 participants in CAPS, is a regular contributor to Fool.com and Rule Breakers. Tim didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio and his latest blog commentary.The Motley Fool's disclosure policy prefers a little less conversation and a little more action.


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