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. Terra Industries may be off from its highs, but the growth that it has seen over the past few years has helped it post a gain of more than 300%, even as the rest of the market tanked.
But for all their beauty, growth stocks are also Wall Street's prima donnas. 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 Jessica Albas from the 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. (Run the screen for yourself, if you like.) Let's go ahead and meet our contestants.
International Business Machines
For a good case study on transitioning a business, take a look at IBM
If you like turnaround stories, you could put Corning
In mid-February, Amedisys reported its fourth-quarter and 2008 results. For the full year, the company grew net service revenue 70%, and its earnings-per-share growth of 30% marked the sixth consecutive year that the company has posted growth of 20% or better. Need we say more? The market for home health-care services has treated the company well so far, and more opportunity seems to lie ahead as the U.S. population continues to age.
Buffalo Wild Wings
Building a national brand in a fragmented industry like beer and wings has done wonders for Buffalo Wild Wings
The envelope, please...
The voting is in, and the CAPS community members have shared their opinions. Right off the bat, we're going to kick Amedisys out of the running. Despite its torrid growth, the stock has been stuck with a two-star rating on CAPS, thanks to concerns raised by Citron Research over the company's accounting.
IBM and Buffalo Wild Wings are the next two getting voted off the island. Both have managed only mediocre three-star ratings on CAPS. When it comes to B-Wild, many CAPS members seem to really like the business, but the concerns from other members over the stock's valuation, and the headwinds that the recession will provide, have held the stock's rating down.
The fight for the top spot came down to Monsanto and Corning, but in the end, Corning had the edge. Of the 3,212 CAPS members who have rated Corning, 3,120 have given it a thumbs up. CAPS All-Star ddberg summed up the bullish position midway through last year, when rating the stock an outperformer:
Love what they're doing and the segments in which they operate. One of those large blue chips that I don't pay enough attention to because, well, it's a large blue chip. Big mistake on my part. These guys have their hands deeply in LCD screens (big and small), fiber optics, solar and other alternative powers, etc, and are leaders across the board. Just a great, innovative, well-run company.
Now go vote!
Do you think that Corning 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.
Buffalo Wild Wings is a Motley Fool Hidden Gems selection. Dell is a Motley Fool Inside Value 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. The Fool''s disclosure policy would surely win America's Next Top Disclosure Policy, but for some reason there's no such contest.