Investments that have been successful over the long term almost assuredly share at least one thing in common -- growth. You'll be able to find very few companies that have been unable to increase their earnings and yet still have produced good returns for shareholders.

Hansen Natural (NASDAQ:HANS), for example, has been one of the best stocks over the past decade. That shouldn't be surprising when you consider that the company grew earnings at a compounded annual rate of over 40%. Laboratory Corp's (NYSE:LH) stock has also had an impressive run; the company managed to average annual earnings growth of 21% per year.

Does it seem too simple? Maybe keeping it simple is a good plan sometimes. After all, as Third Avenue's Marty Whitman put it:

Based on my own personal experience -- both as an investor in recent years and an expert witness in years past -- rarely do more than three or four variables really count. Everything else is noise.

With that in mind, I've dug up five stocks that analysts expect will notch earnings growth of 10% or better over the next year -- no small feat in this environment. I've also pulled up the CAPS rating for each stock to show what the 130,000 members of the Motley Fool's CAPS community think of the company's prospects.


Expected Growth

Forward P/E

CAPS Rating (Max 5)

Goldman Sachs (NYSE:GS)




Buffalo Wild Wings (NASDAQ:BWLD)




Visa (NYSE:V)




Nuance Communications (NASDAQ:NUAN)




Diageo (NYSE:DEO)




Source: Capital IQ, a division of Standard & Poor’s, Yahoo! Finance, and CAPS. Forward P/E based on fiscal 2009 estimates.

Wall Street analysts aren't known for being supernatural in their forecasting skills, so not all of these estimates may pan out. However, this list may be a good place to dig in for further research -- in fact, I'll even get you started with some thoughts on Motley Fool Income Investor favorite Diageo.

Feeding the growth
Actually, Diageo drinks in most of its growth. The company is one of the largest beverage businesses in the world, and if you've ever sipped some Johnnie Walker, had a Bailey's and cream, or thrown back some Jose Cuervo, then you've contributed to Diageo's growth.

Now as my fellow Fool Mike Pienciak recently pointed out, alcohol peddlers like Diageo haven't seen beverage sales perform quite as well as some analysts projected they would during the recession. Despite that, my take on Diageo is very similar to Mike's. That is, the stock provides a safe port during the market storm. Its products are solid, dependable sellers, and the 3.5% dividend that it pays is well protected by the company's strong balance sheet and significant cash flow.

But don't be fooled -- just because the company has a stable financial footing doesn't mean that significant growth isn't on the horizon. Diageo has its sights firmly set on the world's emerging markets and has been boosting its marketing efforts in those areas to help entrench its brands. Already it has the No. 1 standard scotch in Russia and China, the No. 1 vodka in India, and the No. 1 premium scotch in South Africa and Brazil. The global recession may have stalled some of these markets, but I expect many of them to come roaring out of the gates when the clouds lift.

Calling all bulls
Flipping back to Marty Whitman's quote above, now that we've highlighted growth as one of those important variables, I'd suggest that most of the time a reasonable valuation is another. In the case of the list above, despite healthy, growing businesses, Visa and Buffalo Wild Wings have only scored middle-of-the-road three-star ratings from the CAPS community. The fact that both carry earnings multiples above 20 is probably not a coincidence.

Flipping over to the CAPS community, CAPS Member akaprimo noted Diageo's strong business fundamentals and relative stability: "Great brands. Good dividend that looks sustainable. Next quarter or two may be shaky but after that watch out." Looking at the growth angle again, fellow Diageo bull AlpineFlower added:

This company will grow strongly in the next few years (at least). Great balance sheet, and strong management. Paul S. Walsh has added great guidance since he took over in 2000. He's concentrated DIAGEO by selling off their side interests in the food market, and having them focus solely on their quality drinks. Smart move-they've created a niche.

But what do you think?
Do these stocks have what it takes to post solid growth in this economy? Or have analysts been too optimistic? Currently there are over 130,000 members of the free CAPS community that are sharing their opinions on thousands of stocks. Head over to CAPS and let the community know what you think of Diageo or any of the other stocks listed above.

Related CAPS Foolishness:

Buffalo Wild Wings and Nuance Communications are Motley Fool Hidden Gems selections. Diageo is a Motley Fool Income Investor selection. Hansen Natural is a Motley Fool Rule Breakers pick. Laboratory Corp. of America Holdings is a Motley Fool Stock Advisor recommendation. The Fool owns shares of Buffalo Wild Wings. Try any of our Foolish newsletters today, free for 30 days

Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. You can check out the stocks he's keeping an eye on by visiting his CAPS page. The Fool’s disclosure policy likes to keep it simple -- make your disclosure properly and you don't get put in the camel clutch sleeper hold.