Are you really a growth investor?

It's worth asking. Even though talk of a growth stock rally has spread to the pages of The Wall Street Journal, investing in fast movers can be a stomach-churning experience.

Just look at what the Nasdaq 100 index of mostly tech stocks has done over the past week. Part of the problem is that high-growth firms have begun to lose the expectations game. Other growth stocks are falling just because their peers have gone out of style for a few days.

Witness Web-based digital photo publisher Shutterfly (NASDAQ:SFLY), which was down more than 3% this morning without reporting a single piece of news. Surprised? Don't be. Market panics occur daily. That's why all-star investors bet on growth over the very long term. They know that:

  1. Businesses that make investors billions always begin as growth stocks.
  2. The best of them feature massive and identifiable competitive advantages.
  3. Growth as a strategy has the capacity to deliver 20% or greater annual returns for decades at a time. 

How we do it
Of course, not all growth stocks will do. Our weekly hunt is for the next great multibagger. But unlike David Gardner and his team at Motley Fool Rule Breakers, who scour everything from financial statements to trade magazines to clinical reports in their research, we're going to rely on our Motley Fool CAPS investor-intelligence database.

Specifically, we're looking for stocks that have earned a five-star rating in CAPS and which are expected to grow their earnings by at least 20% annually over the next five years. Five-star stocks are those that the community, on the whole, believes will outperform the S&P 500.

Let's have the list
Now, with that preamble behind us, here are five more top growth stocks:


No. of CAPS Ratings

Bullish CAPS Ratings

5-Year Growth Estimate









Celadon Group (NASDAQ:CLDN)




PeopleSupport (NASDAQ:PSPT)




WMS Industries (NYSE:WMS)




Sources: Motley Fool CAPS, Yahoo! Finance.

Bear in mind that this isn't a list of recommendations. Instead, I offer these stocks as candidates for further research. But, of these five, it's current Rule Breakers pick IPG Photonics that interests me most.

My Foolish colleague Karl Thiel's thesis is that the company's fiber lasers, already a staple for materials processing, would come down in price to the point that they'd disrupt better-known approaches. That, in turn, could lead to new devices for medical imaging, telecommunications, and more.

I agree with Karl (surprise!), as does TMFBreakerJava, who's both a CAPS All-Star and a regular rebel on our Rule Breakers discussion board. Here's his pitch for the stock:

Rapid technical progress has increased demand for IPG Photonics' fiber lasers and the company is building out capacity. Margins are improving rapidly and the company produces its own semiconductor technology, giving it a cost advantage.

Intrigued? Do your own due diligence and then check in with thousands of other investors at CAPS. And, if you'd like, add your own commentary. You'll be helping your fellow Fools and testing your ideas at the same time. Click here to get started now; the service is 100% free.

See you back here next week for five more top growth stocks.

PeopleSupport is a Hidden Gems Pay Dirt recommendation.

Fool contributor Tim Beyers, who is ranked 6,785 out of more than 60,000 participants in CAPS, is a regular contributor to and Rule Breakers. Tim didn't own shares in any of the companies mentioned in this article at the time of publication. Find Tim's portfolio here and his latest blog commentary here. The Motley Fool's disclosure policy is your portfolio's competitive advantage.