Color to the Numbers: Top Bargain Growth Stocks

Financial websites have given investors more tools than ever to screen the markets for stock ideas. But those screens provide just the raw numbers -- not the story behind them. What might look like the start of a trend could merely be a one-time blip. Let's enlist Motley Fool CAPS to color in the outlines these numbers create.

To find the cream of the crop of bargain growth stocks, offering great growth trends at a reasonable price, we'll screen for stocks with:

• Price-to-earnings-to-growth (PEG) ratio of no more than 0.75.
• Projected earnings growth for the next five years in excess of 25%.
• Annual revenue of at least $100 million.
• Free cash flow of at least $30 million.

Then we'll tap the collective intelligence of our 83,000-plus CAPS investors to see whether these companies present real opportunities -- or whether they're priced low for a reason.

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

The doctor is in
When it comes to medical treatment, consumers don't often go looking for the cheapest doctor they can find to take care of ailments. And while plucking bargain-priced stocks out of the health-care-services sector won't kill you -- at least, not directly -- it certainly can be a source of anxiety.

One cheap health-care stock investors are visiting today is HLTH. The company owns a majority of WebMD, which provides online health information services, as well as a data management company and a medical plastics product firm. Shares of HLTH got a nice 20% boost today, as the company announced earnings and an agreement to merge with its WebMD subsidiary.

Prior to today's news, investors were feeling a little nauseated following a 30% drop in the stock over the past year. Neither investors nor the company itself was certain it could consummate the merger with WebMD; the company announced last week that the parties had not yet found a set of mutually agreeable terms. On top of this, HLTH CEO Kevin Cameron took leave for medical reasons. Now that an agreement is in place, and the company stated that it sees strong interest in the other divisions it is shopping, investors are celebrating.

While HLTH has been one of the best at growing revenue over the last several years, not everyone thinks it has all the traits to be the next big thing. But many CAPS investors liked HLTH Corp. at prices far higher than the current $12, even with less certainty about the merger and spinoffs. Whether the 107 investors who voted bullishly prior to today would maintain their optimism for beating the market is unknown, but it's a strong enough endorsement to give HLTH a five-star rating.

Still flying low
Airlines such as UAL, American, and now Delta seem to routinely pop up on our bargain growth screen. As these domestic airlines continue to churn out cash from operations, the stocks keep falling, making them look like a bargain. After exiting chapter 11 last year, Delta hasn't seen much upside. The company continues to struggle to improve efficiency and find a consolidation plan that makes sense for the business.

CAPS investors haven't budged much on Delta or other airlines; the Atlanta-based carrier has maintained a lowly one-star rating for at least the past six months. A full 60% of CAPS All-Stars rating the company remain bearish, with challenges such as high fuel costs and intense competition still weighing on many investors' minds. From my seat way back in coach class, I'm not sure whether Delta will ever straighten up and fly right.

Let 83,000 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.