5 Stocks Geared for Growth

A stock's price follows its earnings, which in turn follow its sales. A company needs only to take care of its business for investors to profit in the long run.

With that in mind, examining companies whose revenues and profits are rising -- and which inspire analysts' confidence in continued future growth -- should give us a fertile field in which to discover solid candidates for long-term outperformance.

The roaring 20s
Below are a handful of companies that have enjoyed 20% or more annual growth in sales and earnings over the past three years, and for which analysts forecast total growth of 20% or more over the next two years. We'll then pair up those predictions with the community stock research at Motley Fool CAPS, to get an idea of which companies the 140,000-plus members think have the best chances of beating the market over the long haul.

Sources: Capital IQ, a division of Standard & Poor’s; Motley Fool CAPS.

Just because an analyst predicts that a company will experience fantastic growth doesn't mean that those predictions will become reality. But their preferred picks do offer an excellent starting place for your own research into extreme buying opportunities, so let's see why some of these companies may or may not be held in high esteem by investors, considering they all appear to be sales and profit machines.

Tippling at the speakeasy
Many investors, when they hear the word “outsourcing,” think of remote IT firms like Infosys (NASDAQ:INFY) and Mahindra Satyam (NYSE:SAY). While those companies’ growth has mirrored the rise and popularity of outsourcing, their stocks' recent performance has been a reflection of the cratering economy. In addition, Mahindra Satyam is still trying to renew its reputation after corporate fraud struck the company earlier this year.

U.S. domestic competitors such as Cognizant Technology Solutions have seen a similar growth-and-crash trajectory. By the time the recession was officially in full swing, Cognizant's shares had tumbled substantially, perhaps because it was "closer to the scene of the crime" as an American company. Yet after having dropped fractionally behind the pack, it seems like Cognizant is also recovering ahead of its peers. Although both Cognizant and Infosys have seen shares rebound strongly since the low point hit last November, Cognizant is offering up rosier projections for the immediate future than either Infosys or another close competitor, Tata Consultancy.

With delivery centers in the U.S., Eastern Europe, India, and China, Cognizant is ready for the economic recovery, says CAPS member MavenPicker: "Strong technology company providing IT consulting and tech services globally. Strong growth. Excellent fundamentals. Just chosen by Zacks as Aggressive growth company to recommend based on upgrade of analyst opinion."

What a life
Despite sounding like it preys on the misfortunes of others, the viatical business provides dying patients with a ready source of cash. Industry leader Life Partners Holdings buys life-insurance settlements at a discount and immediately gives the cash to the policy owners. Upon their death, Life Partners receives the benefit due on the policy. It might seem like they'd end up hoping for a swift end to come for the owner, but it really provides a valuable service. The elderly, for example, can sell their policies for cash rather than letting them lapse due to expensive premiums.

It's a profitable business, too. Life Partners' revenue has grown 91% compounded annually over the past three years. Net income has averaged nearly a triple annually over that same three-year period. That could help explain why CAPS member ablanco32000 has marked it to continue outperforming the market: "good numbers like pe, no debt, growth in revenues and profits, and with a high short interest level."

No Great Depression
It pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. Why not head over to the completely free CAPS service and let us hear what you've got to say about these -- or any other stocks that you think we should add to our dance card?