Tuesday's Top 5 Growth Winners

Ask cheapskate value investors to buy a stock that's achieved a new 52-week high and you'll get one of two responses:

1. Hysterical laughter.
2. Sudden nausea.

Pity them, Fool.

How many times has Activision (NASDAQ:ATVI) touched a new 52-week high on its way to becoming a six-bagger in four-and-a-half years? Too many to count, of course.

Let that be a lesson. Rocket stocks -- that is, high-growth stocks that are also realizing heavy price appreciation -- are sometimes worth buying.

Rocket stocks, not rocket science
And sometimes they're worth buying in bulk. Think of Baidu.com. My buddy Rick Munarriz recommended China's top search engine to our Motley Fool Rule Breakers subscribers at $83.37 in October of last year.

I thought he was nuts. I mean it. The stock was both expensive and on a tear. So, I argued against buying it in a January duel here at Fool.com. Now Baidu is a four-bagger. How I wish I had listened to what Rick was telling me those months ago.

Don't do as I did. Never assume an expensive stock is too expensive. What looks like a cliff could really be base camp on a climb toward the summit of Everest. Each day in this column, with the help of the 77,000 pro and amateur stock pickers in our Motley Fool CAPS community, we'll seek to find those still climbing.

Our candidates will be found daily in the 52-week high lists at The Wall Street Journal. But few high-fliers will make the cut; we're looking for stocks expected to boost net income by at least 15% annually over the next five years and which earn at least two of five stars from our CAPS contingent.

Here are today's candidates for your consideration:

Our mostly small-cap list features some promising though speculative stocks. Yet these tiny titans can create astounding returns if bought before they get discovered. Witness copper-clad aluminum and steel wire manufacturer Fushi International, which has more than tripled over the past 52 weeks. The S&P 500 has managed to return just 4.6% over the same period.

A ray of returns
But I've taken a greater liking to health-care stocks lately. Some of that is due to our widening focus on life-altering technologies at Rule Breakers. Experience says that investing early in stocks like Mindray Medical (NYSE:MR) can make you rich.

Can we think of Varian similarly? The technology is certainly striking. Varian's software helps radiologists more accurately target cancer cells in treatment.

But is the stock, which yesterday reached a new 52-week high, still worth buying? A 1.63 PEG ratio isn't exactly reassuring, yet, as with most rebel stocks, high growers like Varian are only expensive till the next breakthrough.

More innovations could be on the way. Varian has a history of increasing its spending on research and development, which accounted for 6.6% of revenue over the trailing 12 months. And we know from a recent article in IT trade publication Computerworld that Varian stocked up on technologists who have expertise in databases, embedded systems, and user interfaces -- all areas which play a role in the rapidly advancing field of radiology.

Perhaps All-Star investor Ayax2006 says it best. Quoting his October pitch in CAPS:

Varian is a leading maker of sophisticated radiology machines for treating certain cancers. Expect high growth in this field with the aging population in rich countries and basically no penetration (yet) of these services in the developing countries. I expect big advancements in these therapies and Varian holding a big market share should stay at the forefront of these important developments. This is an attractive long-term buy.

Of course, that's just one Fool's opinion. What's your take? Would you buy Varian at today's prices? Let us know by signing up for CAPS now. It's 100% free to participate.

I'll be back tomorrow with more rocket stocks.