5 More Top Growth Stocks

Are you really a growth investor?

It's worth asking. Even though talk of a growth stock rally has spread to the pages of The Wall Street Journal, investing in fast movers can be a stomach-churning experience.

Think of TASER (Nasdaq: TASR  ) yesterday. A video of a student being zapped during a speech by Sen. John Kerry (D-Mass.) at the University of Florida punished the stock early. But then the Federal Reserve reported a larger-than-expected half-point cut in overnight lending rates. All was suddenly well again.

Surprised? Don't be. Market panics occur daily. That's why 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 David Gardner and his team at Motley Fool 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

Bullish CAPS Ratings

5-Year Growth Estimate

Gildan Activewear (NYSE:GIL)

118

117

33.0%

AXT (NASDAQ:AXTI)

105

101

28.0%

RRSat Global Comm (NASDAQ:RRST)

97

94

25.3%

Sun Hydraulics (NASDAQ:SNHY)

360

353

24.0%

EMS Technologies (NASDAQ:ELMG)

24

23

24.0%

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. But of these five, wholesale clothier Gildan Activewear interests me most.

Blame the insiders. Management owns 9% of the outstanding stock, and the company has produced consistently excellent returns on equity and capital. Oh, and did I mention growth? The stock is trading at a multiple to earnings that's well below Gildan's expected growth rate.

But Gildan's market position really makes it interesting. Here's CAPS investor tuzowilson to explain:

Market leader in wholesale t-shirts. Now moving into socks on the retail side. Retail should provide higher margins. And if Gildan can execute on manufacturing cost reduction they could dominate the sock market like they do [the t-shirt market].

Intrigued? Do your own due diligence, and then check in with thousands of other investors at CAPS. If you'd like, add your own commentary. You'll be helping your fellow Fools and testing your ideas at the same time. Click here to get started now; the service is 100% free.

See you back here next week for five more top growth stocks.


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