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

Because 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 170,000 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

Average Analyst 5-Year EPS Estimate

CAPS Rating (out of 5)

Accuray (Nasdaq: ARAY)

$352 million

$0.08 vs. $0.05



Cypress Bioscience (Nasdaq: CYPB)

$130 million

($0.05) vs. ($0.11)



Echelon (Nasdaq: ELON)

$329 million

($0.17) vs. ($0.24)



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, because the CAPS community's helping us out, its favorite selections might be a good place to begin.

An alternative opportunity
Although Accuray competes directly against Varian Medical (NYSE: VAR) and TomoTherapy in trying to win the hearts, minds, and scalpels of doctors and hospitals, Intuitive Surgical (Nasdaq: ISRG) is the most familiar competitor, probably because the two offer unique, specialized systems that also happen to be quite expensive and thus sensitive to capital spending cuts.

Accuray's forecast for revenues in 2011 came in below analyst expectations because of the end of deferred revenues recognized under prior contracts, affecting the share price. The stock is down more than 10% over the past month and almost 20% this year.

Cypress Bioscience shares are off 40% this year. However, a deal with Marina Biotech allowing it to acquire Marina's patent rights and technology for carbetocin, a treatment for autism, ought to help bolster Cypress's pipeline of drugs for the central nervous system.

Right now, Savella, a treatment for fibromyalgia, is the only drug Cypress has on the market; it receives royalties from Forest Labs (NYSE: FRX). Savella accounts for 98% of revenues. There's obviously a risk with a one-trick pony like this, but Cypress is actively pursuing growth through acquisitions, so there could be several more sources of revenue coming soon.

A good gauge
Smart grid upgrades are turning into some pretty dumb investments. We were supposed to be wowed by the new technology that would let us monitor our energy usage; it turns out it has the same lasting impact as cotton candy on the tongue. It's pretty cool at first, but in the end we just want lower energy bills, and when regulators are loathe to allow rates to rise during peak periods, the whole system breaks down.

For example, Duke Energy (NYSE: DUK) was going to roll out 800,000 meters to customers in Indiana, only to scale it back drastically because regulators didn't see enough of a benefit to distribute all of the meters. Even so, Duke Energy has extended its contract with Echelon, a smart grid specialist, to use its open, application-ready platform for deployment of intelligent devices. On CAPS, 92% of the members rating Echelon pick it to outperform the broad market averages.

Foolish final thoughts
Investing in stocks is not brain surgery. Finding good, undervalued companies is not as difficult as the professionals want you to think. You just have to commit to starting now, and do so regularly. Now's the time to begin.