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 Act. vs. Est.

Avg. Analyst 5-Year EPS Est.

CAPS Rating
(out of 5)

China MediaExpress (Nasdaq: CCME) $543 million $0.81 vs. $0.69 23% ***
Smith Micro Software (Nasdaq: SMSI) $540 million $0.23 vs. $0.19 16% ****
STEC (Nasdaq: STEC) $898 million $0.31 vs. $0.20 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
You wouldn't need an abacus to count the number of Chinese companies that pay their shareholders dividends. They're relatively few and far between, like steel pipe maker WSP Holdings or cast-resin transformer maker Jinpan International. Some, like Gushan Environmental Energy, have had a spotty record of paying dividends to shareholders, paying out in 2009, but not 2010.

So the decision by China MediaExpress to pay a dividend is not only a welcome occurrence, but a rare one, too. The company, which operates an ad network of digital TV displays on the country's buses and subway system, says the dividend will amount to between 5% and 10% of net profits.

Short-sellers have been attacking the ad house again after having been burned following a big run-up in November. With the number of shares short rising again, CAPS member SGKamm thinks in addition to the fundamentals it has going for it, China MediaExpress is a good squeeze candidate again:

Incredible growth, brand-new dividend, short squeeze candidate, tremendously undervalued because of investors misplaced fears about Chinese corporations. This thing seems like the real deal and the closest thing to a no-brainer I've seen in my short investing career.

Making a connection
Consumer electronics were big this holiday season. Black Friday sales saw consumers shifting aggressively into tablet computers, laptops, and mobile phones and Comscore says consumer electronics were strong throughout the entire holiday season.

Look for NetGear (Nasdaq: NTGR) to be a beneficiary of all this connectedness since the more these devices proliferate, the greater consumers' need to upgrade their networking gear. With so many Wi-Fi devices tapping onto the network, consumers are going to need to go from 11g standards to 11n and NetGear is the leading provider of the technology.

But that also means Smith Micro Software is likely to advance, since its technology is used to connect computers to the Internet over cellular networks via mobile hotspot devices and USB plug-ins. The CAPS community is certainly expecting it, with 96% of more than 800 members rating the communication software maker to outperform the market. You can connect with other CAPS members on the Smith Micro Software CAPS page and let us know what the 4G revolution means to it.

Man the ramparts
Having been caught flat-footed by EMC's (NYSE: EMC) inventory issues, STEC found itself having to fend off slumping sales numbers for a good part of the year and turned in lackluster results for 2010. Yet storage remains an important sector for the new generation of highly flexible datacenters and STEC's focus on the enterprise could be key. Maybe even becoming a takeover target itself.

EMC recently paid 13 times sales for Isilon Systems, on par with the valuation assigned to 3Par after the bidding war between Dell (Nasdaq: DELL) and Hewlett-Packard. A similar price tag on STEC would put it at around $70 a share, but even if an offer wasn't made at such a lofty level, shareholders are still looking at significant gains.

CAPS members aren't looking at a takeover for STEC to shine. Like NetGear benefitting from the need to power wireless devices, foollips is looking for a storage upgrade cycle at the enterprise level to upgrade STEC: "As enterprise companies start replacing their storage systems to expand capacity and replace old storage devices, SS storage devices are going to take off."

You can add STEC to the Fool's free portfolio tracker to keep an eye on what other signals it's sending.

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!

Netgear is a Motley Fool Stock Advisor choice. Jinpan International is a Motley Fool Hidden Gems recommendation. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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