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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 Switch and Data (Nasdaq: SDXC  ) , which yesterday fell more than 5% 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 the Motley Fool Rule Breakers team, which scours 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 four- or five-star rating in CAPS and that are expected to grow their earnings by at least 20% annually over the next five years. Four- and 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:


Recent Price

CAPS Stars

(5 max)

5-Year Growth Estimate

Net Servicos de Comunicacao (Nasdaq: NETC  )




China Medical Technologies (Nasdaq: CMED  )




Inverness Medical Innovations (NYSE: IMA  )




LKQ (Nasdaq: LKQX  )




Buffalo Wild Wings (Nasdaq: BWLD  )




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 interesting, if imperfect, companies to work with. Parts supplier LKQ was recently downgraded, and Buffalo Wild Wings is poised to pop. On the other hand, China Medical Technologies was a stock star in October, and Inverness Medical is positioned to profit from the flu season.

This is your portfolio on the beach
My favorite this week, though, is Rule Breakers recommendation Net Servicos de Comunicacao, a Brazilian telco that's profited from a fast-growing Brazilian economy.

Trouble is, growth appears to be slowing. Tax revenue fell for the second consecutive month in December. Prior to November, Brazil hadn't seen declines since 2004, Reuters reports. Officials are responding with a budget freeze to preserve a surplus -- a sort of emergency fund for debt service, you might say.

Slower growth certainly would impact Net Servicos and other locals, such as Petrobras (NYSE: PBR  ) . But the company has been growing so much -- 27% on the top line in the last quarter -- that it will likely continue to be a fast mover even if a slowdown sets in.

Longer term, CAPS All-Star DarkToast sees the company as positioned for rich returns. Quoting:

This company provides Internet services to Brazil. For the time being their market is going to be somewhat limited. A lot of Brazilians access the Internet through Internet cafes. The wired landline infrastructure only covers part of the country, and isn't growing very much. Accessing the Internet through cell phones is frustrating, as many of us know. Cable is available in even fewer areas than landlines. WiMax is going to change all of that. When WiMax rolls out to Brazil, and true broadband Internet becomes available wirelessly, one of the Internet companies is going to reap a windfall.

Agreed, but I'm more interested in your take. Would you buy Net Servicos de Comunicacao 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!

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. Petrobras is an Income Investor pick. Net Servicos de Comunicacao is a Rule Breakers recommendation. Buffalo Wild Wings is a Motley Fool Hidden Gems pick, and The Motley Fool owns shares.

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 Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy overcame its growing pains years ago.

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12/31/1969 7:00 PM
NETC.DL $0.00 Down +0.00 +0.00%
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CMEDQ.DL $0.00 Down +0.00 +0.00%
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