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. Just ask investors who hold shares of Motley Fool Rule Breakers recommendation Syneron Medical (Nasdaq: ELOS  ) , which yesterday fell more than 8% on no news whatsoever. Sheesh.

No matter. 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 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, 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

Zhongpin (Nasdaq: HOGS  )

513

99%

28%

Yucheng Technologies (Nasdaq: YTEC  )

341

96.8%

26.5%

Cognizant Technology (Nasdaq: CTSH  )

812

96.4%

26%

Exelixis (Nasdaq: EXEL  )

2,134

96.5%

24.9%

Global Industries (Nasdaq: GLBL  )

754

96.9%

22.5%

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've some great companies to work with. Food processor Zhongpin is a top micro-cap stock. Several contrarian investors like Chinese banking technology specialist Yucheng. Five-star consultant Cognizant Technology is on the upswing. And construction services provider Global Industries is positioned to help investors beat the recession.

Checking on Exelixis
My favorite, though, is Rule Breakers recommendation Exelixis. Foolish colleague Charly Travers hooked me like a wide-mouth bass with his original thesis, and I've yet to wiggle off the line. Quoting from his November 2005 write-up:

Genentech's (NYSE: DNA  ) success is largely based upon having a portfolio of great cancer drugs: Avastin, Herceptin, Rituxan, and Tarceva. Every one of those drugs is an important therapy with booming sales. Don't you wish you could have invested in Genentech when it was small? Or at the very least find the next Genentech before it gets big? With Exelixis, we have that chance.

Exelixis has -- count 'em -- 11 drugs now in clinical trials, 10 of which are in active development. Were even one of them to achieve FDA approval, shareholders could win big.

As CAPS All-Star ResearchLover wrote in March, "I am a molecular biologist and have been at presentations for mid/late stage compounds, such as PPAR ligands, that EXEL is developing. They have the expertise to develop successful compounds. And they are at a bargain basement price now."

I still agree, even though shares have risen 30% since then. But that's my take. I'm more interested in what you think. Would you buy Exelixis 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!

Fool contributor Tim Beyers, who is ranked 20,640 out of more than 115,000 participants in CAPS, didn't own shares in any of the companies mentioned in this article at the time of publication.

Tim seeks the best of tech as a contributor to Motley Fool Rule Breakers, which counts Exelixis and Syneron Medical among its holdings. Syneron is also a Motley Fool Hidden Gems Pay Dirt pick. The Fool owns shares of Exelixis. Get access to all of Tim's writings here. The Motley Fool has a disclosure policy.


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  • Report this Comment On September 21, 2008, at 1:56 AM, crca99 wrote:

    Would I buy EXEL at today's price? Shoot, I bought when it was higher, but I got 5 bags out of DNA.

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