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, not core operations.

Just like the color-by-numbers books kids doodle on, the picture for stocks pulled from any screen is not clear until the appropriate hues are added. In this edition of "Color to the Numbers," we'll enlist Motley Fool CAPS to take a Foolish look at a screen for mid-cap growth stocks, examining which stocks merit further investigation, 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 mid-cap growth stocks. By pulling up a stock quote in CAPS, investors can see how the collective community rates a company as well as the very best All-Star stock pickers -- CAPS players with a ranking greater than 80. There's even pitch commentary and blogs that give details behind bull and bear opinions. In all, CAPS gives investors much more qualitative resources than mere numbers and tables.

Let's look at today's growth screen, using the following criteria:

  • Market cap between $1 billion and $5 billion.
  • Price to earnings to growth (PEG) ratio of less than 1.0.
  • Free cash flow (FCF) of at least $100 million.
  • Estimated annual earnings growth of at least 20% for the next five years.

This should give us the cream of the crop: Stocks that have already hit their stride, with strong performance but a still-palatable price. Of course, there may be good reasons why these companies trade at low multiples. (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.


PEG ratio

CAPS rank (out of 5)

Core Laboratories (NYSE:CLB)






Greif (NYSE:GEF)



Oshkosh Truck (NYSE:OSK)



Hansen Natural (NASDAQ:HANS)



NutriSystem (NASDAQ:NTRI)






Data from Yahoo! Finance. Star ratings from CAPS. All data as of Sept. 20, 2007.

One of the five-star stocks topping our list of mid-cappers is Core Laboratories, an oil and gas technology and services company that helps energy companies maximize the oil and gas extracted from fields and wells. Many CAPS investors think Core Labs is a great way to play the energy sector while having some protection in down cycles because the company is not exposed directly to the price of oil and other factors that make oil stocks volatile.

The company has been steadily growing revenue at double-digit rates over the past several years and nearly doubled operating income in 2006. The continued demand for energy and ongoing improvement in efficiency of operations helped bring in just more than $105 million in FCF in the trailing 12 months, allowing Core Labs to pop up on our mid-cap screen for the first time. CAPS investors largely think the company will stay there, with 210 of the 219 investors who rated the company voting for it to beat the market going forward.

While truck manufacturing isn't an industry typically associated with high growth, Oshkosh Truck has turned in revenue growth that's accelerated more than 23% in the past two fiscal years. This year has been even better for the maker of industrial trucks and military vehicles, with last quarter's earnings rolling ahead 68% on the back of a 79% sales surge, thanks in part to the acquisition of JLG Industries. While a few investors are leery of a potential future cutback in military spending, the bulk of CAPS investors -- almost 96% of them - remain bullish on the company.

Let 65,000 investors be the judge
The collective wisdom of a huge pool of investors can quickly enliven a whitewashed page of numbers. But even with an entire community acting as the judge, individual investors are still the jury. Perform your own research, Fools! 

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

Fool contributor Dave Mock does his best to color within the lines, but reserves his right to artistic expression. He owns no shares of companies mentioned here. Dave is the author of The Qualcomm Equation.

The Fool's disclosure policy doesn't see color or the wart on your nose.