Peter Lynch is renowned for overseeing Fidelity's prestigious Magellan Fund from 1977 to 1990. Lynch grew his assets from a paltry $18 million to over $10 billion by the time he retired. Astoundingly, he held more than 1,000 individual stock positions and his fund averaged an annual 29.2% return over the course of his management.

Lynch is equally well-known for telling each person to "invest in what you know," and in his acclaimed book One Up on Wall Street, he also laid out the blueprint for investing in various types of stocks. However, he did have a very distinct preference of his own. Regarding fast growing stocks, Lynch states that, "these are among my favorite investments: small, aggressive new enterprises that grow at 20%-25% a year." While growth stocks can be risky, Lynch says that "one or two of these can make a career."

So in order to identify Lynch's growth stocks we used a screen to find companies with:

  1. Average earnings growth greater than 10% over the past three years
  2. Average revenue growth greater than 20% over the past three years
  3. Return on equity greater than 15%
  4. Inside ownership of at least 15%

Lastly, we enlisted the intelligence of our 145,000 member strong CAPS community by only selecting stocks that have a minimum of three stars. These stocks certainly have the potential to be market-beating fast growers, so feel free to dig a bit deeper on your own.


Earnings Growth
(3 Years)

Return on

CAPS Rating
(Out of 5)

China Sky One Medical (NASDAQ:CSKI)




ClickSoftware Technologies (NASDAQ:CKSW)




Female Health Company (NASDAQ:FHCO)




Health Grades (NASDAQ:HGRD)




M & F Worldwide (NYSE:MFW)




Source: Capital IQ (a division of Standard & Poor's) and CAPS.

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Jordan DiPietro doesn't own any shares of the companies mentioned. Try any of our Foolish newsletters today, free for 30 days. The Fool has a disclosure policy.