5 Stocks With a Bright Future

Investments that have been successful over the long term almost assuredly share at least one thing in common -- growth. Very few companies have produced good returns for shareholders without increasing their earnings in the process.

Think about it this way: Dividends aside, investors reap their gains when a company's stock price goes up. The stock price is typically driven by two levers: earnings, and the multiple that investors are willing to pay for those earnings. Since earnings multiples tend to fluctuate within a certain range, long-term investors should focus keenly on a company's ability to increase earnings.

Does that seem too simple? Sticking to the basics can sometimes be a good plan. After all, as Third Avenue's Marty Whitman has put it:

Based on my own personal experience -- both as an investor in recent years and an expert witness in years past -- rarely do more than three or four variables really count. Everything else is noise.

With that in mind, I've kept it simple, unearthing five stocks that analysts expect will notch long-term earnings growth of 10% or better. I've also pulled up the CAPS rating for each stock to show what the 135,000 members of the Motley Fool's CAPS community think of the company's prospects.

Source: Capital IQ, a division of Standard & Poor's; and CAPS. P/E = price-to-earnings ratio.

Wall Street analysts aren't known for their supernaturally accurate forecasts, so not all of these estimates may pan out. However, this list may be a good place to dig in for further research. I'll even get you started with thoughts on a couple of these stocks.

Cool to the touch?
Though it has the highest expected growth of the group, Wynn Resorts gets the least respect from the CAPS community. Not that the case is much different with the other casino stocks -- Las Vegas Sands (NYSE:LVS) and Boyd Gaming (NYSE:BYD) are both rated two stars.

Considering Wynn's P/E in the table above, it shouldn't be surprising that valuation is a primary concern among CAPS members. Furthermore, many of the Wynn bears on CAPS doubt that the company can deliver on the kind of growth that analysts expect.

Wynn's second-quarter results continued to suffer under the weight of recession, but as I've argued in the past, I think the CAPS community may have this one wrong.

Bringing the heat
But what about high growth and a high rating from the CAPS community? For that, we can turn to CVS Caremark.

What's so great about CVS? Well, for one, it's a health-care business, which provides some good recession defense. And let's not forget the double-digit expected growth. Combine the two, and it's like getting a fat slice of delicious, calorie-free chocolate cake.

And heck, the company is already proving that it can deliver on those growth expectations. When it reported its second-quarter numbers last week, it showed earnings growth of 15% -- better than what analysts were anticipating. The company's pharmacy benefits management business was a key driver for CVS, posting better than 25% year-over-year revenue growth.

On CAPS, more than 1,400 members have given CVS Caremark's stock a thumbs-up. Among that herd of bulls is CAPS All-Star directd, who rated the stock an outperformer back in March and said:

Great way at playing the pharmaceutical industry without the risk of picking a company dealing with blockbuster drugs going off patent (as whatever drugs are being sold must go through them!) as well as the generics (drug-store sellers get a bigger cut from them).

But what do you think?
Do these stocks have what it takes to post solid growth in this economy? Or have analysts been too optimistic? More than 135,000 members of the free CAPS community are sharing their opinions on thousands of stocks. Head over to CAPS and let the community know what you think of Wynn, CVS, or any of the stocks listed above.

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