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 Stock Advisor recommendation NVIDIA (Nasdaq: NVDA  ) , which yesterday fell nearly 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

CryoLife (NYSE: CRY  )

151

94%

30%

Hardinge (Nasdaq: HDNG  )

502

96.6%

30%

Clean Energy Fuels (Nasdaq: CLNE  )

673

96.4%

27.5%

Omrix Biopharma (Nasdaq: OMRI  )

386

95.3%

25.5%

SXC Health Solutions (Nasdaq: SXCI  )

153

96.1%

21.8%

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. Both Hardinge and SXC Health are Motley Fool Hidden Gems Pay Dirt picks. CryoLife recently received an upgrade from our best CAPS stock pickers. And Clean Energy Fuels has momentum.

Seal your portfolio's profits
My favorite, though, is Rule Breakers recommendation Omrix Biopharmaceuticals. Here's how Foolish colleague Karl Thiel explained the thesis when he recommended the stock to Motley Fool Rule Breakers' subscribers:

Biosurgery is where the best growth lies, although it only accounts for about a quarter of revenues at the moment. Its main biosurgery product is Crosseal (called Quixil in Europe), a human plasma-derived fibrin sealant used to stanch bleeding during surgical procedures. The worldwide market for surgical sealants is estimated at $500 million to $1 billion, and it's growing at an 11% to 20% annual clip.

It's an important market, especially for Crosseal distributor Johnson & Johnson (NYSE: JNJ  ) , which was recently rumored to be among those ready to acquire Omrix. One offer was for $25 a share. Karl thinks that's low and so do I. Omrix commands just $300 million in market value, yet has the technology to transform a billion-dollar industry.

But don't take my word for it. Look at the records of the insiders. They were buying shares for between $12 and $15 in March. Omrix closed at $17.30 yesterday and, according to Yahoo! Finance, of that price, $4.85 is in cash. You call that a reasonable valuation? I don't.

But that's my take. I'm more interested in what you think. Would you buy Omrix Biopharmaceuticals 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!

On Oct. 7, 2008, Fool co-founder David Gardner and his Motley Fool Pro team invested $1 million in a portfolio designed to help you make money in any market. In the coming weeks, the team, relying heavily on proprietary CAPS "community intelligence" data, will establish long and short positions in a broad range of securities, including common stocks, publicly traded put and call options, and exchange-traded funds (ETFs). To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.

Fool contributor Tim Beyers, who is badly lagging in CAPS at the moment, 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 Omrix Biopharmaceuticals among its holdings. Hardinge and SXC Health are Motley Fool Hidden Gems Pay Dirt picks. Johnson & Johnson is an Income Investor recommendation. Get access to all of Tim's writings here. The Motley Fool has a disclosure policy.


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