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Can You Amass a Fortune With These Stocks?

Rich Duprey
June 8, 2011

You don't need the investing acumen of Warren Buffett or the riches of a trust-fund baby to achieve financial success.

Small sums of money invested monthly in undervalued small-cap stocks offer hope for your greatest returns. They offer the best growth opportunities for growth because the big investors mostly ignore them.

Below, we screen for stocks that have less than a $3 billion in market cap and offered earnings surprises of 15% or more in the previous quarter, with long-term earnings growth forecasted to be at least 15%. We'll then filter our findings through the collective investing wisdom of the 170,000 members in our Motley Fool CAPS community.

Here are some of the stocks this simple screen found.


Market Cap

EPS Actual vs. Estimated

Average Analyst 5-Year EPS Estimate

CAPS Rating (out of 5)

Amarin (Nasdaq: AMRN  )

$2.1 billion

$0.12 vs. ($0.07)



Glu Mobile (Nasdaq: GLUU  )

$258 million

($0.02) vs. ($0.07)



ZAGG (Nasdaq: ZAGG  )

$258 million

$0.13 vs. $0.10



Sources: and Motley Fool CAPS.

Of course, this is not a list of stocks to buy -- just a starting point for more research. We need to look more closely at these companies to see whether analysts' faith in them is well founded.

An alternative opportunity
A lot of times, investors express disappointment when their stock is bought out. Although there's the immediate gain to be booked in the usually higher value of a merger, long-term investors look forward to years of gains from ownership of a stock. Not so with investors in Amarin, a heart-drug developer whose CEO reportedly said it wanted partnerships, not buyouts. The stock is down 10% since the statement was made, suggesting that investors had a much more short-term mindset.

Ever since Amarin's triglyceride-lowering fish-oil therapy AMR101 scored big results when its Anchor clinical trials showed that it met all of its endpoints for safety and did what it was supposed to do without raising "bad" LDL cholesterol, investors have been looking for someone like Pfizer (NYSE: PFE  ) to throw it a line. Perhaps they think it can't fare as well against GlaxoSmithKline's Lovaza or Abbott Labs' (NYSE: ABT  ) own iterations, even if AMR101 seemingly looks better.

CAPS member russellb73 thinks Amarin can do well enough on its own, since its therapy is a potential big winner: "Read the results of two phase III studies for AMR101....totally better than Lovaza (GSK drug 1 billion in sales). Unless 2 phase III trials are fabricated hard to see how you could lose with this one......I guess someone else finds similar results for specific fish oil protein....otherwise AMRN has a blockbuster."

Add Amarin to your watchlist, and head over to the Amarin CAPS page to tell us whether it's best to hedge your bets.

Going mobile is smart
With FarmVille maker Zynga about to go public, the markets are looking more closely at other social-media gaming specialists, including Majestic Entertainment (Nasdaq: COOL  ) and Glu Mobile. Majestic made a big splash with its Zumba Fitness program for the Wii, but it's planning on building on that success with other platforms as well. Glu Mobile is looking to strike it rich with a selection of