Monday's Top 4 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 did Onyx Pharmaceuticals (NASDAQ:ONXX) touch a new 52-week high on its way to producing five-bagger returns this year? 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 and fellow Fool Rick Munarriz recommended China's top search engine to our 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 Rick.

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 towards 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 highfliers 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 are discovered. Witness biotech Incyte, which is up 73% over the past 52 weeks. The S&P 500 has returned just 3.2% over the same period.

One ringy-dingy, two ringy-dingy ...
Chip designer CEVA, up 72% since last December, has done almost as well. New contracts have fueled the surge; 10 were signed during the company's third quarter.

As impressed as I am by CEVA's momentum, I'm even more impressed with its customer list. The company makes chipsets for handheld devices like Apple's iPhone and Palm's Treo. Volume sales of these and devices like them helped CEVA to boost diluted per-share net income by 150% in its third quarter.

The balance sheet is also extremely strong. CEVA boasts $70 million in cash and short- and long-term investments with no debt. That's not likely to change soon, either; CEVA's capital-light business model is built on intellectual property.

And it's a model that the superior stock pickers at TFS Market Neutral (TFSMX) and Vanguard Explorer (VEXPX) love. Each has bought CEVA shares recently. My Fool radar lights up when investors I admire buy stocks on my watch list.

With CEVA, the signal is too bright to ignore. I'm adding the stock to my CAPS portfolio today. But that's me. What's your take? Would you buy CEVA 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.