3 Superb Growth Stocks Worth Buying Now, 2 to Hold Off On

At the beginning of the year, I told you about some advice I had given to family and friends who wanted to build a healthy growth portfolio. Seeking to balance risk with reward, I offered them three levels from which to choose: a Core group, Tier One companies, and riskier Tier Two stocks.

I have no idea if they followed my advice, but here's a look at how a hypothetical $1,000 would have performed, given the allocations I suggested they take with each group of stocks. Below, I'll single out the three best buys now from the group, as well as two I'd hold off on for now. At the end, I'll also offer you a special free report on the one company from the bunch that promises to be the next great multibagger.

Core

Company

Allocation

Jan. 1 balance

Jan. 31 balance

Change

Intuitive Surgical (Nasdaq: ISRG  ) 11.5%  $115.00  $112.13 (2.5%)
Google 11.5%  $115.00  $100.28 (12.8%)
Amazon.com 11.5%  $115.00  $124.89 8.6%
Whole Foods 11.5%  $115.00  $122.48 6.5%

Tier One

lululemon athletica 7.5%  $75.25  $100.99 34.2%
Apple (Nasdaq: AAPL  ) 7.5%  $75.25  $83.53 11%
Westport Innovations (Nasdaq: WPRT  ) 7.5%  $75.25  $95.04 26.3%
IPG Photonics (Nasdaq: IPGP  ) 7.5%  $75.25  $112.42 49.4%

Tier Two

Baidu 5%  $50.00  $51.25 2.5%
Zipcar 5%  $50.00  $56.40 12.8%
Stratasys 5%  $50.00  $59.10 18.2%
MAKO Surgical 5%  $50.00  $63.15 26.3%
Solazyme 5%  $50.00  $48.30 (3.4%)
         
Total 100%  $1,000.00  $1,129.96 13%

Source: Fool.com.

Of course, dividing $1,000 across a portfolio this size isn't realistic. But it just serves as an easy-to-digest proxy for how the portfolio did in January.

And, in fact, it did quite well -- producing a 13% return against the S&P 500's 4.5% gain. I'll take market-beating performance like that any day!

But if you weren't able to get in at the beginning of the year, here are my top three picks from these stocks right now, and two to wait for before buying.

Best buys
For starters, Apple simply hit the cover right off the ball with their most recent earnings release. Fellow Fool Eric Bleeker has already given a complete rundown of the ridiculous numbers the company produced over the holiday season. What I find amazing is this: While earnings growth accelerated, the P/E investors were willing to pay for Apple actually went down. Were the P/E the same today as it was the day of earnings, shares would be worth $543. As I see it, Apple is clearly a buy.

Along those same lines, Intuitive Surgical continued to confound analysts, beating estimates for the 11th consecutive quarter. Yes, the stock is starting to get pricey. But at the same time, more and more da Vinci robot systems are being sold, which furthers experimentation of the machine for new procedures, which also creates more demand for renewable parts. And all of this is being done without a significant competitor. Now is the time to scoop up shares of Intuitive, in my opinion.

Finally, shares of Amazon are currently 27% cheaper than they were just a few months ago. Yes, the company's guidance was a disappointment, but if you look at why they were disappointing, you should be heartened. The company is building out an impenetrable moat -- expensive fulfillment centers are now closer than ever to your front door -- and the company's headcount increased 67%, all but guaranteeing an unparalleled customer service experience. I think you should get in on Amazon while you still can.

Two stocks on hold... for now
I always love when shares of stocks I own appreciate; but when that growth occurs without any significant news or hard evidence coming out to support such a surge, I pull back on my trigger finger.

Such is the case with IPG Photonics. Investors rightly bid shares up from the beginning of the year, as they realized that even if there was a cyclical downturn in manufacturing, the company would undoubtedly benefit from having the cheapest, most efficient industrial lasers on the market. Now that it has risen almost 50%, though, I think it's best to wait until after the company's Feb.10 earnings release to add to your holdings.

And Westport Innovations, engineer of natural gas engines, is in much the same boat. Not only are shares up over 25% on the year, an announcement yesterday shows that competition is on the horizon. Truck maker Navistar will be partnering with natural gas filling station specialist Clean Energy Fuels (Nasdaq: CLNE  ) to produce trucks that run on natural gas. Westport is set to report earnings during the second week of February, and I'll be listening closely to what management has to say, as well as monitoring the Navistar/Clean Energy situation, before buying more shares.

Our Chief Rule-Breaker's favorite
We have a name for the type of investing that I'm practicing here: Rule Breaking -- or investing in innovative companies that are changing our world. Recently, Fool co-founder and Chief Rule Breaker David Gardner sat down to ponder which stock, out of them all, holds the most promise over the coming years.

You can find out which company he picked by reading the report "Discover the Next Rule-Breaking Multibagger." I'll give you a hint, and tell you that the stock is actually in the portfolio I revealed above. But to find out which one it is, you'll have to get your copy today, absolutely free!

Fool contributor Brian Stoffel owns shares of all the companies mentioned except for Navistar and Clean Energy Fuels. You can follow him on Twitter at @TMFStoffel.

The Motley Fool owns shares of IPG Photonics, Zipcar, Solazyme, Whole Foods, Google, Amazon.com, Apple, MAKO Surgical, and lululemon athletica. Motley Fool newsletter services have recommended buying shares of Whole Foods, lululemon athletica, Stratasys, Intuitive Surgical, MAKO Surgical, Baidu, Westport Innovations, Google, IPG Photonics, Zipcar, Apple, and Amazon.com, and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (8) | Recommend This Article (18)

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.

  • Report this Comment On February 03, 2012, at 10:24 PM, ajjr100 wrote:

    I am a bit confused as to the relationship with CLNE and Navistar and your "hold" on Westport. Today I sold my Westport at noon and now I read at 4:00 that Navistar and Cummins/Westport has announced a deal for the engines. What gives and did you jump the gun on your hold?

  • Report this Comment On February 03, 2012, at 11:23 PM, TMFCheesehead wrote:

    @ajjr100-

    I found out the same time you did. This is great news for the company. The Navistar agreement came out before any mention of a partnership with WPRT was announced. I'm sorry you sold, but there's a big difference between a hold and a sell.

    Brian Stoffel

  • Report this Comment On February 04, 2012, at 11:51 AM, ajjr100 wrote:

    Well Brian - while I do recognize fully the difference between a hold and a sell, the fact is that while WPRT has what appears to be a solid future, it has many questioning the strong price, including one or two Motley Fool analysists. An article like this (not being critical) effectively makes a hold become a sell on a stock that has been driven up by nothing but good news and future speculation.

    I'm not really complaining, I have done extremely well with Westport and will repurchase with the first burp of the market.

    I do wish a call had been made to Westport's people asking for their response to the first Navistar announcement. I would think they would have been glad to say "give it a day please".

  • Report this Comment On February 04, 2012, at 1:11 PM, 1984macman wrote:

    Here's a thought regarding Apple that I don't think has occurred to many analysts. They sold 37 million iPhones in the last quarter - and still couldn't keep up with demand. If one assumes that their production peaked at 13 million iPhones a month, then they now have the capacity to produce (12x13=) 156 million iPhones a year. And if one then assumes that they aren't done ramping up production, that suggests they could surpass 200 million iPhones in 2012.

    That is simply stunning.

  • Report this Comment On February 04, 2012, at 2:08 PM, Dagoldbaum wrote:

    I cant believe the way the market is pricing aapl.by any metric you can use ,it is the cheapest stock in the market you can buy.a total no brainer!!!

  • Report this Comment On February 05, 2012, at 8:40 AM, drbillym wrote:

    Brian, I am also confused about the WPRT news. I also cut my stake in half on the initial news-should I buy it back at the open Monday?

  • Report this Comment On February 05, 2012, at 10:24 AM, TMFCheesehead wrote:

    @drbillym-

    I can't provide individual advice on investing situations, as everyone's circumstances and goals are different. I'll be doing a write-up on the situation shortly, so you might want to keep your eyes open for that.

    Brian Stoffel

  • Report this Comment On February 08, 2012, at 2:23 AM, dbbwt2002 wrote:

    I am kinda frustrated by the back and forth articles of how WPRT is a God-send, and the next breath is how overrated and empty their future is. I know we cannot predict the future, but the frustration comes from one extreme to the other, no in between.

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