5 Stocks Ready for Liftoff

Are you really a growth investor?

It's a question 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 RightNow Technologies (Nasdaq: RNOW  ) , which yesterday fell more than 11% 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 seeks the next great multibagger. But unlike the Rule Breakers team, which scours everything from financial statements to trade magazines to clinical reports in its research, we're going to rely on our Motley Fool CAPS investor-intelligence database.

Specifically, we're looking for stocks that have earned a four- or five-star rating in CAPS, and which are expected to grow their earnings by at least 20% annually over the next five years. On the whole, our CAPS community believes that four- and five-star stocks will outperform the S&P 500.

Let's have the list
Here are five more top growth stocks:

Company

Recent Price

CAPS Rating (5 max)

5-Year Growth Estimate

TIM Participacoes (NYSE: TSU  )

$12.64

*****

73.3%

Arch Coal (NYSE: ACI  )

$16.02

*****

37.5%

Aegean Marine Petroleum Network (NYSE: ANW  )

$15.47

****

41%

QIAGEN (Nasdaq: QGEN  )

$16.36

****

23.7%

Cerner (Nasdaq: CERN  )

$38.40

****

20.5%

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 have some interesting companies to work with. Big spending plans by the Obama administration could lift the fortunes of medical record supplier Cerner. Our CAPS All-Stars love Brazilian telco TIM Participacoes. Maritime fuel supplier Aegean Marine's empire is expanding rapidly. And diagnostic products maker QIAGEN experienced rising demand, boosting its third-quarter earnings.

The other black gold
My favorite this week, however, is miner Arch Coal. It's an odd choice in some ways. Arch recently idled some equipment at its Powder River Basin facility, mirroring production cuts by peers like Peabody Energy (NYSE: BTU  ) .

So why buy? Valuation. Arch Coal is priced for very low long-term growth. Unless the world cuts its energy use dramatically, that's likely to be far too cheap a price for Arch. Or at least, that seems to be what our CAPS community thinks; it upgraded the stock in December.

"ACI has a strong business model-their ROI, ROA, & ROE [returns] are all top-shelf. The heating season has just begun in the Northeast & the colossal drop in share price that they have experienced will not last. Eventually [Arch Coal] will see its share price rise up & nicely @ that," wrote CAPS investor jerkimo in December.

Agreed, but I'm more interested in your take. Would you buy Arch Coal at current 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 Jan. 12, 2009, Fool co-founder David Gardner, Jeff Fischer, and their Motley Fool Pro team will accept new subscribers to their real-money portfolio service. Motley Fool Pro is investing $1 million of the Fool's own money in long and short positions in a range of securities, including common stocks, put and call options, and exchange-traded funds (ETFs). They also incorporate proprietary CAPS "community intelligence" data into their research. 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 is slowly recovering his CAPS rating. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out his portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool.

Tim seeks the best growth stocks as a member of the Motley Fool Rule Breakers team. The Fool is also on Twitter as @TheMotleyFool. Its disclosure policy overcame its growing pains years ago.


Read/Post Comments (0) | Recommend This Article (8)

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.

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: 811194, ~/Articles/ArticleHandler.aspx, 11/28/2014 3:50:18 AM

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...


Advertisement