Thanks to the Internet and sites such as Yahoo! and MSN Money, investors have more tools than ever to search for stock ideas by running screens of stock databases. But screens often return numerous stocks that need to be weeded out because the numbers don't tell the whole story. Maybe the massive growth at one company was due to one-time tax adjustments and not core operations. Or maybe the screen didn't include the latest announcement that a dividend was canceled.

So just like the color-by-numbers books kids doodle on, the picture for stocks pulled from any screen is not clear until the appropriate color is added to the page. In this edition of "Color to the Numbers," we'll enlist Motley Fool CAPS to take a Foolish look at a screen for bargain growth stocks to see which stocks may be worth investigating further, and which should be cast aside.

Better a screen than a window
The community of knowledgeable investors who rate stocks in CAPS will help us in our search for bargain growth stocks. By pulling up a quote on a particular stock in CAPS, investors can see at a glance how the collective community rates a company today. Additionally, investors can see how the very best All-Star stock pickers -- CAPS players with a ranking above 80 -- rate a given stock. There's even pitch commentary and blogs that give details behind bull and bear opinions. This gives investors much more qualitative resources than just numbers and tables.

So let's take a look at our bargain growth screen for today and a handful of the top stock candidates it returned. To run this screen, we'll use the following criteria:

  • Price to earnings to growth (PEG) ratio of less than 0.75.
  • Projected earnings growth in excess of 30%.
  • Annual revenue of at least $100 million.
  • Free cash flow of at least $30 million.

This should give us the cream of the crop in terms of stocks with powerful earnings growth still trading at a decent price. As well, the minimums on annual revenue and cash flow will help us pick companies that have already hit stride, not just newbies with little operating history. Of course, there may be very good reasons why these companies trade at low multiples (hint: This is where CAPS can really help!).

Opinions with the numbers
Here's a sampling from the list of stocks our screen pulled up today.


Projected Earnings Growth (Next 5 Years)

CAPS Rank (out of 5)

Freeport McMoRan (NYSE:FCX)



Transocean (NYSE:RIG)



Tidewater (NYSE:TDW)



SiRF Technology (NASDAQ:SIRF)






Gold and copper mining company Freeport McMoRan weighs in with the largest market capitalization in the screen -- $27.7 billion. The company has mining operations in the U.S. and regions such as Indonesia, and has benefited from rising commodity prices over the past few years. Top CAPS players still like the company's cheap prices versus growth prospects though, and are bullish following the merger with copper king Phelps Dodge.

With the massive profits being churned out by integrated oil companies like Exxon Mobil (NYSE:XOM), it stands to reason that there's value down the chain for oil and gas services. It should come as no surprise, then, that Transocean and Tidewater receive high marks from CAPS players.

As we move further through our screen, though, we see a few companies that don't hold as much water with the CAPS clan. SiRF technology builds GPS semiconductors and has had a great run on the heels of the explosive growth of navigation device maker Garmin (NASDAQ:GRMN) and demand for GPS capabilities in cellular phones. But a few CAPS investors are squeamish about the price of shares and competition. The disparity in opinion on the value of SiRF comes from the dramatic difference in P/E ratios -- the trailing P/E sits at 82 versus 17.3 for the forward P/E. At least a few of the top CAPS players aren't certain that type of earnings growth will materialize.

Open Text is another stock that shows well in the screen but poorly in CAPS, with only a two-star rating. Investors looking at this enterprise software provider also have concerns about analysts' high expectations for earnings growth.

Let 28,000 investors be the judge
The collective wisdom of a huge pool of investors can quickly add color to a whitewashed page of numbers. But even with an entire community of qualified opinions acting as the judge, individual investors are still the jury and should perform their own research.

Want to see your favorite screen results run through the wringer in the CAPS community? It's free to tap the knowledge base and even give your own opinion in Motley Fool CAPS.

Garmin is a Motley Fool Stock Advisor selection. To find out all the reasons why, take a free 30-day trial of the market-crushing newsletter service today.

Fool contributor Dave Mock does his best to color within the lines, but reserves his right to artistic expression. He owns shares of Garmin. Dave is the author of The Qualcomm Equation. The Fool's disclosure policy doesn't see color or the wart on your nose.