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 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

Avg. Analyst 5-Year EPS Est.

CAPS Rating
(out of 5)

8x8 (Nasdaq: EGHT)

$133 million

$0.02 vs. $0.01



Ceragon Networks (Nasdaq: CRNT)

$343 million

$0.13 vs. $0.11



Orexigen Therapeutics (Nasdaq: OREX)

$270 million

($0.25) vs. ($0.31)



Source: and Motley Fool CAPS. *Adjusted earnings.

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
Is 8x8 Wall Street's best kept VoIP secret? I've already posited that although it often gets ignored as everyone trips over themselves to fawn over Vonage (NYSE: VG) or Skype, which is planning a much-anticipated IPO, 8x8 quietly goes about its business of making money.

Vonage hasn't been profitable since, well, just about forever, and Skype lost almost $100 million last year. But 8x8 earned $4 million in the last fiscal year which ended in March, with a subscriber base of over 20,000 businesses. The IP-based voice services market was valued at $41 billion in 2009, growing at a 34% compounded annual rate from 2006 to 2009. That's a big market opportunity for this hidden little upstart.

You can add the IP communications service provider to your My Watchlist page and have all the Foolish news and analysis about this stock aggregated in one place.

I'll drink to that
Another communications specialist, Ceragon Networks, which provides microwave backhaul services, has seen a shift in business by Clearwire away from DragonWave (Nasdaq: DRWI) to its own systems. Analysts have noted the change too, upgrading the stock based on the prospects of it growing 30% to 35% this year.

Yet don't get too excited. While there are a lot of international opportunities, the stock trades at a hefty premium to its peers. Ceragon goes for more than 40 times last year's earnings while Comtech Telecommuncations goes for less than half that and DragonWave for a miniscule six times earnings.

CAPS members remain confident though, with 98% of the more than 1,500 community members rating it to post additional market-beating performances. Share your views on the Ceragon Networks CAPS page on how the telecom leader can still stay relevant.

Man the ramparts
Obesity drug stocks melted away shareholder value faster than their pills could have you shedding the pounds after a series of refusals of their treatments by the FDA caused investor panic. Arena Pharmaceuticals (Nasdaq: ARNA) is down more than 75% from recent highs, VIVUS (Nasdaq: VVUS) lost half its value, and Orexigen actually up by 30% over the past quarter. With a decision due on Contrave in December, though, that's a bullet that still needs to be dodged.

Maybe not. While it might not have the same safety profile concerns that led the FDA to body-slam Qnexa, Contrave doesn't have the same weight-loss properties either. But CAPS member Health careGuy thinks we'll see the stock continue to run up toward decision day, and All-Star zzlangerhans says there's no way it will be approved:

Orexigen is up today in a completely counterintuitive trend. I closed my last red thumb as a hedge against a potential positive FDA Advisory Panel vote for Arena's lorcaserin. Now that such an outcome appears less likely, Orexigen should be going down, not up. Only a madman could think that Orexigen would get past the FDA after negatives on Vivus and Arena.

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 to starting now, and do so regularly. Now's the time to begin!

Ceragon Networks is a Motley Fool Hidden Gems pick. Try any of our Foolish newsletter services free for 30 days.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Fool contributor Rich Duprey currently does not own any stocks as you can see here. The Motley Fool has a disclosure policy.