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.

Yesterday offers a good example. When Wal-Mart (NYSE:WMT) lowered its forecast for full-year earnings and Mattel (NYSE:MAT) announced yet another recall, investors fled for the exits. And the high-growth tech stocks? They sold off like all the rest.

Witness Apple. On the day that the collected solo works of John Lennon went on sale at the iTunes store, the stock was down by nearly 3%. 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 seeks 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

Five-Year Growth Estimate





Activision (NASDAQ:ATVI)




IRIS International (NASDAQ:IRIS)




Healthextras (NASDAQ:HLEX)








Source: 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, I'm most intrigued by Global Gains pick GigaMedia, an online entertainment specialist based in Taiwan.

Why? A 0.40 PEG ratio helps. So does the endorsement of Bill Mann, who, in picking the stock for the January issue, theorized that the ever-increasing number of Asians going online would substantially boost revenue and, thereby, cash flow. He's been right thus far.

But CAPS investor QualityPicks seems to think there's plenty of room to run from here:

Excellent return on equity of 28% and on capital of 26%. This company is growing at 30% or more. At this price, [it] is starting to look very cheap. This stock should be worth $20 dollars.

Intrigued? Do your own due diligence, then check in with thousands of other investors at CAPS. 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.

Activision is a Stock Advisor pick. Wal-Mart is an Inside Value recommendation, and PDL Biopharma is a Rule Breakers pick.

Tim Beyers, ranked 6,462 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.