You don't need the investing acumen of Warren Buffett or the riches of a trust fund baby to achieve financial success.

Since the stock market is your best hope for realizing your dreams, start investing today, by putting away small sums of money every month. Then seek out undervalued small-cap stocks for your greatest returns. I like these stocks because they offer opportunities for growth, while still being mostly overlooked by the big investors.

To find these future giants, we'll screen for stocks with market values less than $3 billion, an earnings surprise of 15% or more in the previous quarter, and forecasts for long-term earnings growth potential of at least 15%. We'll filter our findings through the collective investing wisdom of the 165,000 members in our Motley Fool CAPS community. If the best and brightest CAPS players think these stocks hold potential, we ought to take notice, too.

Here are some of the stocks this simple screen found:


Market Cap

EPS Surprise

Avg. Analyst 5-Yr EPS Est.

CAPS Rating

Sonus Networks (Nasdaq: SONS)

$726 million

($0.01) vs. $0.00



Coinstar (Nasdaq: CSTR)

$1.7 billion

$0.13 vs. $0.21


** (Nasdaq: OSTK)

$488 million

($0.07) vs. $0.16



Source: and Motley Fool CAPS.

Of course, this is not a list of stocks to buy -- just a starting point for more research. We need to look more closely at these companies to see whether analysts' faith in them is well-founded. Still, since the CAPS community's helping us out, their favorite selections might be a good place to begin.

An alternative opportunity
With the enterprise segment of session-border-controller markets expected to grow 49% a year till 2013, Sonus Networks' new switch for its just-as-new IP connection platform makes it a worthy competitor to Acme Packet (Nasdaq: APKT).

If that paragraph sounded like a lot of geekspeak to you, don't worry -- you're not alone. The jargon simply means that as more information gets routed over the Internet, it'll need robust gatekeepers to regulate the flow of traffic from outside networks. Sonus Networks' switch is a software-based solution that it claims is the most dense and scalable SBC in its class. Analysts are impressed with it so far, too, but the true test will lie in how Sonus delivers future capabilities.

CAPS member watchthis was similarly exuberant earlier this year: "New platform coming out by June, 2010 will blow away current VoIP and take full advantage of data over IP. Huge market!!"

Taken for a ride
From humble beginnings as a boardwalk crane-toy game operator, Coinstar has metamorphosed into a movie-rental powerhouse through its kiosk-based model. It's grown so powerful that Blockbuster (NYSE: BBI) was forced to adopt its strategy to stave off bankruptcy. With 25% of the movie rental market to call its own, Coinstar's Redbox business has even eaten into mail-order wunderkind Netflix (Nasdaq: NFLX).

But will success go to its head? CEO Mitch Lowe says the company's test marketing different price points for movie rentals, including as much as $2 a night. Much of the attraction of Redbox has been its $1-per-night rental fee; admittedly, twice that amount still represents a discount to what you'll find at Blockbuster's bricks-and-mortar stores. But with streaming movies poised to become the next logical step in rentals, Coinstar might be setting itself up to lose its videophile fanbase.

Price points between the two extremes could be found that wouldn't impact demand, but would immediately boost profits. Still, some investors aren't convinced about Redbox's lasting impact on the industry. CAPS member xjp83x sees it as just a way station on the road to streaming:

i personally am against this sudden rise in coinstar's price. redbox wont go anywhere with netflix going streaming. i think this hype created by investors and institutions will dwindle down as time goes by.

In the eye of the beholder
Critics have been predicting the demise of online retailer for some time, but it manages to continuing surprising the naysayers. In its most recent quarter, revenue soared 42% to $264 million, and the company turned a year-ago $0.17-per-share loss into a $0.16-per-share profit.

Of course, with three restatements of its financials in the past four years, and the disclosure that it still hasn't fixed the material weaknesses in its reporting, Overstock's critics might be right to caution that what you see isn't necessarily what you're going to get.

With (Nasdaq: AMZN) as a formidable e-commerce rival, CAPS All-Star Otrex certainly won't cut Overstock any slack:

This company offers no advantage to the online shopper, and clearly operates on some pretty creative accounting practices. My hunch is that this company is not around in 5 years.

Foolish final thoughts
Stock investing is not brain surgery. Finding good, undervalued companies is not as difficult as the professionals want you to think. You just have to commit: Start now, and invest regularly. Now's the time to begin! and Netflix are  Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletter services today, free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.