Peter Lynch is famous not just for his enviable track record as 13-year head of Fidelity Magellan, but also for his quirky investment strategies. The market's best stocks, according to Lynch, are small, growing companies flying below Wall Street's radar.

It makes sense, after all, to pick out the strongest companies that have the greatest chance of being overlooked, and hence, mispriced. As investors, we should all take advice from the man who not only minted fundholders a 28-bagger but actually coined the investing term "-bagger."

With that in mind, I used our new CAPS screening tool to find stocks Peter Lynch might love. Below are seven companies with four- or five-star ratings from our CAPS community.

They also have:

  • Three-year trailing earnings-per-share growth at least 25%.
  • Price-to-earnings multiples below 25.
  • Market capitalizations below $10 billion.



Market Cap

Atwood Oceanics (NYSE:ATW)

Basic Materials

$2.37 billion

Diana Shipping (NYSE:DSX)


$1.18 billion


Industrial Goods

$5.04 billion

Fluor Corp (NYSE:FLR)

Industrial Goods

$8.14 billion

Dolby Laboratories (NYSE:DLB)


$5.42 billion

DreamWorks Animation (NASDAQ:DWA)


$3.52 billion

Walter Energy (NYSE:WLT)

Basic Materials

$4.10 billion

Data from Motley Fool CAPS and Yahoo! Finance as of Dec. 29.

Of course, screens are merely a first step in the stock-selection process. Come and join us on Motley Fool CAPS to let the collective wisdom of our 146,000-strong CAPS community help you make your investment decisions. There's information and opinions on more than 5,000 stocks, and don't forget the screening tool to help you sort information. It's all free.

Atwood Oceanics, Dolby Laboratories, and DreamWorks Animation SKG are Motley Fool Stock Advisor recommendations. The Fool has a disclosure policy.