Are you really a growth investor?

It's worth asking. Fast-moving tech stocks were obliterated last week, leading to a slew of bargains for those with the guts to buy.

No surprises there. Market panics occur daily. Just ask investors who hold shares of Jupitermedia (NASDAQ:JUPM), which yesterday fell 6% on no news whatsoever.

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

Vivo Participacoes (NYSE:VIV)




China Fire & Security (NASDAQ:CFSG)
















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.

At first, I was extremely tempted to go with Motley Fool Global Gains pick and digital gaming specialist GigaMedia. But that would be too obvious, for the stock has more than doubled since Bill Mann singled it out in the January issue.

Still, with a 1.09 PEG ratio, the stock may yet have room to run.

Betting on business smarts
Put it on the watch list. For now, I'm sticking with business intelligence specialist Actuate, which has been a 30% winner for me in CAPS since I added it to my portfolio in June.

Surely some of that is due to the bump the stock received earlier this week when IBM (NYSE:IBM) agreed to acquire Cognos, a peer, for $5 billion. The rest might be best summarized in this article. Here's the relevant excerpt:

Actuate's technology fills a need. Though classically known as a vendor of reporting tools, Actuate entered the analytics business in 2003 and today offers a complete suite of tools for gathering and analyzing business data. And that's big business. Known as BI, this market takes in roughly $50 billion a year in revenue and is growing at a double-digit pace.

Today, roughly 98% of those who have rated Actuate in CAPS still agree with my thesis, and that includes 55 of 57 All-Stars.

What about you? What would you do? Let us know by signing up for CAPS today. It's 100% free to participate.

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

Tim Beyers, who is ranked 11,784 out of more than 74,000 participants in CAPS, is a regular contributor to and Rule Breakers. Tim owned shares of IBM at the time of publication. Find Tim's portfolio here and his latest blog commentary here. GigaMedia and HDFC Bank are Global Gains picks. The Motley Fool's disclosure policy is your portfolio's competitive advantage.