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 SanDisk (Nasdaq: SNDK  ) , which on Wednesday fell nearly 6% on no news whatsoever. Sheesh.

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 which 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, most strongly 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:

Company

No. of CAPS Ratings

Percent Bulls

5-Year Growth Estimate

Mindray Medical (NYSE: MR  )

1,316

98.6%

44%

CTC Media (Nasdaq: CTCM  )

122

93.4%

28.4%

America Movil (NYSE: AMX  )

1,543

98.4%

25.4%

The9 (Nasdaq: NCTY  )

908

97.4%

23.1%

3SBio (Nasdaq: SSRX  )

377

96.5%

21%

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.

We have some great companies to work with. There are nine good reasons to like The9, and one really great reason to love America Movil, one of Latin America's top mobile-phone service providers: It's trading for less than 15 times earnings -- way too cheap for the growth opportunity that lies before it.

A powerful blast from Mindray
Even so, I'm partial to Rule Breakers recommendation Mindray Medical, a Chinese medical-device maker that sports excellent net margins -- more than 20% -- in a commoditized industry that features, among others, Boston Scientific and Johnson & Johnson (NYSE: JNJ  ) .

I'm not the only one who likes the stock. Here's how analysts at Standard & Poor's assessed the company's prospects as of Monday:

We expect [Mindray] to continue to exhibit strength organically across all business segments and geographic regions, aided by new products and sales and support staff expansion. We see domestic sales benefiting from increased government tenders, while international sales should benefit from competitive pricing and our view of China's strengthening currency.

Others, such as CAPS superstar pennysplants, who commented in March, like the long-term competitive advantages provided by Mindray's $202 million deal for peer DataScope:

Any wonder this is my 4th reup? Yes, things may stagnate here for a while during the DataScope integration, but I can wait til '09 for increased earnings and cross-selling to become accretive. Analysts are saying 40-45% annual eps growth. I'd settle for 25% with a company of this quality and in this sector.

Agreed, but I'm more interested to know what you think. 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!

Tim Beyers, who is ranked 18,642 out of more than 115,000 participants in CAPS, is a regular contributor to Fool.com. He didn't own shares in any of the companies mentioned in this article at the time of publication.

Tim seeks the best of the tech as a contributor to Motley Fool Rule Breakers, which counts Mindray Medical among its recommendations. Get access to all of Tim's writings here, or enjoy a daily dose of his Foolishness via this feed for your RSS reader.

Johnson & Johnson is an Income Investor pick. The Motley Fool has a disclosure policy.


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  • Report this Comment On August 16, 2008, at 10:51 AM, joboz wrote:

    It appears that only America Movil has the cloud and market share to last for the next 5-10 years.

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