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 Estimate

CAPS Rating 
(out of 5)

China-Biotics (Nasdaq: CHBT)

$231 million

$0.39 vs. $0.33



Coinstar (Nasdaq: CSTR)

$1.5 billion

$0.39 vs. $0.33



Gulf Resources (Nasdaq: GFRE)

$281 million

$0.47 vs. $0.34



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
And if you perform your due diligence on China-Biotics, you just might come away very afraid by what you find. Citron Research has published a number of hard-hitting questions about the veracity of the company's financials and the claims it makes about its growing retail network. A few investors have taken to rebutting some of the claims, but as there are with a number of Chinese small-cap companies these days, the taint of potential fraud hangs over the stock. Shares have fallen more than 40% from the highs reached earlier this spring.

While 91% of CAPS members rating China-Biotics believe the probiotics distributor will go on to outperform the broad market averages, the number of members downgrading the shares has grown substantially, with many pointing to the critical reports as the reason. Needless to say, buyer beware.

You can add the stock 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
From humble roots as a means for McDonald's to generate an alternative revenue stream, movie rental kiosk distributor Redbox has become a full-throated competitor to Netflix (Nasdaq: NFLX) and has flourished where Blockbuster has crumbled. Owned now by Coinstar, McDonald's one-time partner is increasingly focused on making use of the "fourth wall" potential the kiosks offer.

Where it's going to need to respond, however, is the growing threat streaming video represents to its future cash flows. Netflix is preparing for the end of DVD dominance with its Watch Instantly service, and is mulling the decision to offer a streaming-only subscription plan. Coinstar and Redbox need to figure out how a similar option might be able to play out. Having successfully brought the $1-per-night rental concept to reality, a similarly super-low streaming plan could keep it relevant, and we can expect to find out what their plans are when they release their third-quarter results later this month.

CAPS All-Star FleaBagger says he sees evidence its kiosks remain popular, while emptygestures believes the stock, which is down 25% from its 52-week highs, is bargain priced.

This is so dirt cheap right now. They are hitting their 200 DMA. Blockbuster announcing bankruptcy this week, [Netflix]'s streaming is garbage, and continued expansion of Redbox's make this a winner!

Man the ramparts
Strong demand for bromine in China's pharmaceutical sector is allowing top producer Gulf Resources to raise prices. Even U.S.-based Albemarle (NYSE: ALB) has been able to institute price increases on flame retardants, while TETRA Technologies (NYSE: TTI), another leading producer for the oil and gas industry, saw a 28% increase in revenues primarily as a result of increased volumes of clear brine fluids last quarter.

Gulf is one of the largest bromine producers in China, as there are only six licenses issued by the state and the other five holders generally produce bromine for their own use. That pretty much gives Gulf Resources the market all to itself. Although there are bunches of small, unlicensed bromine producers -- China has shut down hundreds of them -- Gulf's strategy is to acquire them to continue growing in size.

CAPS member mkl56 believes Gulf Resources holds a unique position in the Chinese market, one which may make it attractive to competitiors.

State-sponsored virtual monopoly on mineral extraction, accretive aquisitions of small producer properties and strong, growing domestic demand. Will GFRE develop international trade? Is [Gulf] a take over target for an Albemarle?

Add Gulf Resources to your My Watchlist page where all the Foolish news and analysis about this stock is aggregated for you.

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!

Netflix is a Motley Fool Stock Advisor recommendation. 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.