Growth stocks are the beauties of the stock world, plain and simple. They're exciting, they have good stories, and they can make you a lot of money. Mosaic
But for all their beauty, growth stocks are also the prima donnas of the market. They can be erratic, they don't always live up to their billing, and they tend to attract a shareholder base that's ready and willing to run at the first signs of slowdown. For those reasons, caution is certainly in order when you enter the world of growth investing.
Fortunately, The Motley Fool's CAPS service brings us the collective intelligence of a community of more than 115,000 investors, making it a great resource for separating the market's Jessica Albas from its Jabba the Hutts. Each of the stocks competing for this week's top spot has a market cap of at least $100 million, and each grew its net profit per share by an average of 20% or more per year over the past three years. (You can run the screen for yourself, if you like.) Let's go ahead and meet our contestants!
Though some investors have been scared of this stock for a while, DryShips
What do I really need to say about search giant Google
It doesn't take any big leap to say that Petrobras
Though Intuitive Surgical
Although Sony's profit has averaged significant growth over the past few years, it's taken a very different path than most of the other companies above. Revenue growth for Sony has been somewhat middling, but the company has capitalized on the value at some of its subsidiaries by selling of pieces of them. In the company's 2008 fiscal year (which ended last March), $1.2 billion of the company's total pre-tax profit (roughly 20%) came from asset sales.
The envelope please...
Right off the bat, CAPS members give DryShips and Sony the boot, thanks to their lowly two-star ratings. While there are a good number of DryShips bulls on CAPS, among the highest-rated players, the stock gets considerably less love; quite a few CAPS members actually consider it a bankruptcy candidate. And while Google may be the reigning king of search, its three-star rating also keeps it out of the upper echelons of CAPS stocks.
The contest gets a bit more interesting when we get to Intuitive Surgical. Though the stock's valuation may put it at the expensive end of the market, CAPS members have liked it enough to stick it with a four-star rating. This is good, but not quite good enough to capture the top spot.
Instead, Petrobras wears this week's crown. It may be a Brazilian company, but it's a beauty of a stock on the U.S. markets, according to CAPS members.
Among the 3,500-plus Petrobras bulls on CAPS, All-Star Ayax2006 chimed in earlier this month: "This Brazilian oil company with large reserves and important recent discoveries will easily outperform the market in the coming years, as the oil price and Brazil recover."
More recently, BalanceGHopper added a thumbs-up and suggested that oil prices may not stay down forever: "Oil is cheap, but as we recover..."
Now go vote!
Do you believe that Petrobras has what it takes to be America's next top growth stock? Head over to CAPS and let the rest of the community know what you think.
Petroleo Brasileiro is a Motley Fool Income Investor selection. Microsoft is a Motley Fool Inside Value recommendation. Google and Intuitive Surgical are Motley Fool Rule Breakers selections. 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. The Fool's disclosure policy would surely win America's Next Top Disclosure Policy, but for some reason, there's no such contest.