Investors are always hunting for the next big stock -- the dream stock whose price increases several times over when the market finally discovers it. It's easy to look back and discover the 10 best stocks of the past decade. But I'm more interested in the tools that can help me evaluate tomorrow's greatest companies.
Motley Fool CAPS offers a variety of resources to aid Fools in finding tomorrow's leaders. Our 145,000-member community is full of investors helping each other beat the market.
We'll enlist CAPS to screen for technology companies, then get the story behind some of its more highly rated stocks. CAPS' nifty screener will help us find stocks with:
- A market cap of at least $100 million
- A three-year revenue growth rate of at least 20%
- A price-to-earnings ratio of less than 25
Then we'll tap the collective intelligence of our CAPS members to see whether these companies present real opportunities -- or whether the numbers fail to tell the true story.
Opinions with the numbers
Below is a sample of stocks our screen returned. You can run this screen yourself -- remember, though, that your results may differ from ours as the market changes.
|
Company |
Revenue Growth Rate, Past 3 Years |
CAPS Rating (Out of 5) |
|---|---|---|
|
Neutral Tandem |
42.4% |
**** |
|
Nuance Communications |
35.7% |
**** |
|
China Unicom |
20.6% |
**** |
Data and star rankings from CAPS as of Nov. 27, 2009.
Neutral Tandem
Neutral Tandem provides tandem interconnection services to wireless, wireline, cable, and broadband carriers. It's been busy expanding its reach and carrying more data over its networks, which boosted its third-quarter revenue by 44% year over year, with profit jumping 80%. The strong momentum prompted it to raise its fourth-quarter guidance, and many CAPS members like the growth potential of the small-cap company. It's increasing its presence in existing markets and entered 10 new ones in the quarter. It has minimal debt on its balance sheet and many investors believe it will continue to use its cash wisely to position itself in profitable markets. In CAPS, about 96% of the 333 members rating Neutral Tandem expect it to outperform the market.
Nuance Communications
Nuance has recently experienced strong product and licensing sales growth, helping it report better-than-expected fiscal fourth-quarter profit, and many CAPS members expect it to continue to benefit from increasing demand for voice recognition technology. The company picked up new mobile solutions bookings in the quarter from companies including AT&T
China Unicom
Along with competitors China Mobile and China Telecom, China Unicom was awarded a 3G operating license last January to offer advanced wireless services in China. The company expects strong growth as a result, and CAPS members like the potential of mobile Internet services in the huge Chinese market. China Unicom has been recording month-on-month gains in average revenue per user since the launch of its 3G services in October and looks to increase the number of its 3G users by more than 1 million a month. It's currently the exclusive carrier of Apple's iPhone in China, and despite a slow start, is still confident in its potential and expects it to boost revenues. At this point, 96% of the 716 CAPS members rating China Unicom believe it will beat the S&P.
Let 145,000 members be the jury
The collective wisdom of a huge pool of investors can help give context to a page of numbers from a stock screen. But individual investors are still the best judges of what to do with their own money. Fools should always perform their own due diligence.
Happily, it's easy to chime in with your own opinion. If you agree that these companies present dream opportunities -- or see more of a nightmare instead -- simply scroll down and add your thoughts in the comments box.
