As I'm a member of the Rule Breakers newsletter team, few will confuse me for a deep-value investor. I prefer turnover to turnarounds. I define the C in DCF as "catalysts." I find more investing ideas in lists of heavily shorted stocks than among the fresh 52-week lows.

Despite all this, I am no spendthrift. I am passionately cheap. The catch is I see great prices in growth stocks. I think that's important. Value investors may have been jumping all over real estate developers last summer, when they seemed to be trading at single-digit P/E multiples. What happened? Earnings crashed, multiples expanded, and homebuilder stocks fell even further.

I prefer to hitch my portfolio's wagon to stocks that are growing. You can try your luck at nailing the top and bottom of cyclical stocks. I won't. Why should I, when there are just way too many bargains out there from stocks that have consistently delivered the goods?

Five for the road
Now that we're knee-deep into the second half of 2007, we're starting to get a handle on forward estimates for fiscal 2008. Let me run a few names past you. Tell me if you thought they were trading for higher forward multiples than they actually are.

Recent Price

Next Year EPS

Forward P/E

Southwest Airlines  (NYSE:LUV)




Force Protection (NASDAQ:FRPT)








Research In Motion (NASDAQ:RIMM)




Suntech Power (NYSE:STP)




Data from Yahoo! Finance.

Finding growth stocks with 2008 profit multiples running from the single digits to the low 30s may not seem cheap at first glance, but dig a little deeper to appreciate what some of these companies are doing.

Southwest is still that dependably profitable air carrier. Force Protection is sorely in demand as a maker of blast-resistant military vehicles. Heelys may be a fad, but at less than seven times next year's earnings, the cash-rich company is priced as if the genie's out of the bottle for keeps. Research In Motion is a stud with its BlackBerry mobile devices. Suntech is making the most of the movement toward solar energy cells as an alternative energy form.

All five companies are growing, with analysts expecting healthy advances come next year. Yes, that includes Heelys. If you're looking for bigger, more familiar names, Sun Microsystems is now fetching just 17 times next year's earnings. EBay (NASDAQ:EBAY) is a little pricier at nearly 25 times next year's profit target, but it's showing the world that it's more than just an auction site, thanks to subsidiaries such as Skype and PayPal.

These are important growth stocks, yet they are fetching multiples that seem a better fit with sleepy utility stocks or predictably steady money-center banks. So how can these not be the cheapest stocks that you know, too?

I'm sorry: They're affordable.

Buying the right kind of growth stock
The companies that I consider -- heck, demand to be considered -- cheap are growing at incredible rates, yet they're priced as if they were only modestly above average. They also have a history of blowing past analyst profit targets, so the forward-looking estimates have a pretty good chance of being revised higher in the coming quarters.

That's where I want to be. Yes, Rule Breakers is a growth-stock newsletter service. Dig deep into the scorecard and you will find:

  • A fast-growing Chinese leisure company trading at just 14 times next year's earnings.
  • A luxurious pampering services specialist, also fetching just 14 times forward profitability.
  • Two of the five stocks I mentioned earlier -- Force Protection and Suntech Power -- continue to have a bright future and do, in fact, look cheap in my book.

Growth stocks are the greatest value stocks I know. Remember when Google went public at $85 in the summer of 2004? Did you think it was overpriced at the time? If so, you weren't alone.

But no one knew that the company was positioning itself to earn $19.53 per share come 2008. Those who got into Google early snapped up a stake in the paid search giant for just 4.4 times next year's profits.

Getting in early on the right growth stocks is the key. Just your luck -- the growth-stock kissing booth doesn't have much of a line these days. Pucker up, my friend.

Force Protection and Suntech Power are Rule Breakers picks. If you want to unearth the other "potentially cheap" stocks in the newsletter, punch in now for a free, 30-day trial offer.

This article was originally published on Feb. 15, 2007. It has been updated.

Longtime Fool contributor Rick Munarriz does not own shares in any of the companies in this story. EBay is a Stock Advisor recommendation. Rick is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.