7 Stocks With a Bright Future

Investments that have been successful over the long term almost assuredly share at least one trait: growth. You'll be able to find very few companies that have been unable to increase their earnings and yet still have produced good returns for shareholders.

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 have a keen focus on the company's ability to increase earnings.

Does it seem too simple? Maybe keeping it simple is a good plan sometimes. 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 and dug up 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 160,000 members of the Motley Fool's CAPS community think of the company's prospects.

Source: Capital IQ (a division of Standard & Poor's), Yahoo! Finance, and CAPS.
NM = not meaningful.

Wall Street analysts aren't known for being supernatural in their forecasting skills, 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 some thoughts on these stocks.

Cool to the touch?
Sorry Sirius fans, but the CAPS community has logged a pretty solid vote against Sirius' stock, despite the high growth Wall Street expects. And I can't help but agree with the low rating.

For me, it's not so much that the company is only now poking its head into profitability after years of losses. Nor is it the ton of debt on its balance sheet. Though those things do worry me, what really concerns me is the company's entire business model. While I know there are plenty of die-hard fans of satellite radio out there, I just don't see it thriving as other (better) technologies come on the scene.

Netflix is another company with a big subscriber base that Wall Street thinks has big growth ahead. Yet the CAPS community has given the stock a very lukewarm reception. Why? If you ask me, the company's growth and margins could come under attack as -- once again -- new technologies make inroads into its business.

Specifically, as online streaming starts to gain steam, Netflix is going to have to fight harder to convince customers that its service is better than those of a growing swarm of competitors. In that light, I just don't see why Netflix's stock merits such a high multiple.

I think it's largely a different story with both Visa and Amazon. Both have clear competitive advantages and will very likely have long, successful runs as industry leaders. But investors are hip to that fact already and have bid both stocks up to valuations that just aren't all that attractive. Should the valuation on either of these fall, we'd likely see CAPS members tripping over themselves to give them a thumbs-up.

Bringing the heat
I normally like to stay on the same page as CAPS members, but I have trouble getting on board with Suntech Power, or any of the solar stocks for that matter.

While I don't believe solar power will be the answer to all of our energy problems and the savior of Mother Earth, I do think the technology has a good future. The problem, though, as with any emerging technology, is trying to figure out who the winners -- or even the survivors -- will be. Could Suntech be one of them? Absolutely. But at this point it's still a bit of a crapshoot.

Marathon Oil and Western Union have been going strong for more than a century. Sure, integrated oil and money transfers may not have the pizzazz of solar technology, but these two companies have been battle tested and have proven themselves to be solid, enduring businesses.

We should be able to expect both companies to continue to deliver. For Marathon, it's all about the company's proven ability to increase production, build reserves, and keep costs low on the upstream side, while cashing in on industry-leading downstream capabilities. With a low valuation, a 3% dividend yield, and strong expected growth, that seems like a pretty good value proposition.

For Western Union, the future likely holds continuing worldwide dominance of money transfers, while at the same time staying nimble and offering new services like prepaid cards and Internet and mobile transfers. Oh yeah, and pumping out ridiculous amounts of free cash flow.

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? Head over to the free CAPS community and let the 160,000 members know what you think of Marathon, Western Union, or any of the stocks listed above.

When should you sell a good stock? If you ask Fool co-founder Tom Gardner, the answer is probably "never."