Is growth back? That's what The Wall Street Journalis reporting, and leading institutional investors such as T. Rowe Price asset-allocation analyst Ned Notzon agree. He says that the premium that once separated growth and value stocks has disappeared.

But it could be better than that. Think of eBay (NASDAQ:EBAY), which this week reported a 39% rise in net income, or Rule Breakers pick Vertex Pharmaceuticals (NASDAQ:VRTX), which announced that it could be sitting on a billion-dollar drug.

What's more, a survey of leading investment managers conducted by the Russell Investment Group says the growth rally will continue through the remainder of the year. And relatively new Fidelity Magellan manager Harry Lange says growth isn't just good, it's cheap. "I am still convinced that this is the place to be, and if anything ... I have been adding even more to growth stocks," Lange told Reuters.

Don't dump the downtrodden
Surely Lange's optimism draws from years of success with growth stocks as manager of Fidelity Capital Appreciation, which thumped the market during both the go-go years of the bubble and the ugly aftermath that ensued. But there's also more to it than that. History, for one.

Growth stocks did better than value for the six years between 1994 and 2000, as technology stocks soared. Value stocks have been on a roll since. Now, as earnings growth begins to show signs of slowing, fast movers unaffected by general economic malaise could return to prominence. That's why, when Lange took the helm of the Magellan fund, he dumped Pfizer and bought Google (NASDAQ:GOOG).

Funding growth
What's more, growth funds have lagged value funds for far too long. Consider small growth go-getter T. Rowe Price New Horizons, which has returned an average 10.7% over the past five years. Great though that is, it's just short of small value superstar Royce Special Equity, which has returned 10.8% annually over the same period.

Now, New Horizons manager John Laporte is betting on speedsters such as educator Laureate (NASDAQ:LAUR) and restaurateur Panera Bread (NASDAQ:PNRA) to return his go-go style to the podium. (Both firms are expected by Street analysts to expand earnings by more than 20% annually over the next five years.)

Be a rebel with a cause
Here at Fool HQ, we've begun to see the turn as well. Over the summer, David Gardner's Motley Fool Rule Breakers portfolio was bleeding red. And the quest for the next Starbucks was stuck in the mud. No longer. Today, the portfolio is once again beating the market and features four stocks that have at least doubled.

How did it turn around? My analysis points to three traits shared by our biggest winners:

  1. A competitive advantage in an important, emerging market.
  2. A sustainable business growing at an above-average pace.
  3. Top-flight mangers who have a clear vision for what they wish to accomplish.

As you seek the sort of multibagger returns that helped growth gurus like Peter Lynch and Philip Fisher make millions from thousands, remember these factors. And, in the meantime, if you're looking for ideas for how to take advantage of the current growth stock rally, click here to get 30 days of free access to Rule Breakers. We'll show you everything we're buying now.

This article was originally published on Nov. 14, 2006. It has been updated.

Fool contributor Tim Beyers is a sucker for growth stocks and a regular contributor to David's Rule Breakers service. Tim didn't own shares in any of the companies mentioned in this article at the time of publication. Fidelity Capital Appreciation, T. Rowe Price New Horizons, and Royce Special Equity are Champion Funds selections. Pfizer is an Inside Value recommendation. EBay is a Stock Advisor pick. The Motley Fool's disclosure policy is a rebel with a cause.