Build Your Fortune With These Winners

The Oracle of Omaha, Warren Buffett, turned an initial bankroll of $10,000 into a multibillion-dollar conglomerate. Shelby Davis began with $50,000, and he amassed a $900 million fortune. These inspiring stories give us all hope that we'll be able to achieve our own financial dreams. But what if you don't have $50,000, or $10,000, or even $5,000 to get started?

Fear not, Fool -- you aren't doomed to penury and misery. You don't need to be a trust-fund baby to start securing your financial future. Just follow these four simple steps:

• Start today!
• Invest regularly. Every month, put away $250, $100, even $50.
• Look to the stock market for your best hope of realizing your dreams.
• Seek undervalued small-cap stocks for your greatest returns.

Why small caps?
Because they offer the greatest potential for market-beating returns. Institutions tend to ignore these tiny stocks, and analysts don't cover them. By the time anyone realizes they're there, they've already grown and appreciated in price.

To find these future giants, we'll screen for stocks with:

• Market values less than $3 billion, to qualify as a small cap (but no micro caps)
• An earnings surprise of 20% or more last quarter
• Long-term earnings growth potential of at least 20%

We'll filter our findings through the collective wisdom of the more than 140,000 professional and novice investors in our Motley Fool CAPS community. If the best and brightest CAPS members think these stocks hold potential, then we ought to take notice, too.

Here are some of the stocks this simple screen found:

Source: Earnings.com; Zacks. NC=Not calculable, Internet Capital reported EPS of $0.08 vs. ($0.19) estimate. MRQ = Most recent quarter.

Of course, this is not a list of stocks to buy. It's a starting point for more research. We need to look more closely at these companies to see if analysts' faith in them is well-founded, but we've got the CAPS community helping us, so we'll start with one of the favorites there.

Online shopping goes south
Perhaps it tires of the comparison, but MercadoLibre, the "Latin American eBay (NASDAQ:EBAY)," has been performing like its rival to the north used to. Third-quarter revenue rose 25% in dollars, or more than 42% in local currencies. The number of items MercadoLibre sold on its site increased 43%, representing the sixth consecutive quarter of accelerated growth.

When CAPS member tombo615 questioned the auction site's valuation back in October, noting that its market value far exceeded book value, another member, rjs157, suggested looking at the opportunity the market represented:

what about the growth in Latin America? This growth will drive revenue for the firm and validates the current valuation

At more than 40 times forward earnings, MercadoLibre does sport a rich price tag, much like e-commerce provider Amazon.com (NASDAQ:AMZN). The question for investors is, can the company justify its valuation the way the e-tailer has? Use the comments section below to let us know if the auction site is overvalued, or head over to MercadoLibre's CAPS page to place your bid on whether it will continue to outperform.

Foolish final thought
Academics will tell you that individual investors have little chance of beating the stock market. They say the Warren Buffetts, Shelby Davises, and Peter Lynches are the exceptions to the rule. We at The Motley Fool don't agree. Stock investing is not brain surgery. Finding good, undervalued companies is not as difficult as the professionals want you to think.

It is possible to make a more comfortable retirement for yourself, even if you have little money to start with or are starting late in life. It is possible to turn $100 into $1 million. You just have to commit: Do it now, and do it regularly. No amount is too small. Let's get started. There's no time to lose!