5 More Top Growth Stocks

Are you really a growth investor?

Fast-moving tech stocks have taken a beating recently, and the market's daily fits of panic have led to a slew of bargains for those with the guts to buy. On Monday, shares of eHealth (Nasdaq: EHTH) fell more than 4% 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 also feature massive and identifiable competitive advantages.
3. As a strategy, growth can deliver 20% or greater annual returns for decades at a time. 

How we do it
Each week, we hunt for the next great multibagger. But unlike David Gardner and his Motley Fool Rule Breakers team, who scour everything from financial statements to trade magazines to clinical reports in their research, we rely on our Motley Fool CAPS investor-intelligence database.

We're looking for stocks with the maximum five-star CAPS rating, and at least 20% annual expected earnings growth over the next five years. Here's what we turned up this week:

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 tempted to go with aptly named NetGear, which makes equipment for connecting home and small business users to the Web and private networks. What stopped me? Competition. Even though management's execution has rarely been better -- returns on capital remain above 14%, and remarkably stable -- Cisco is a tough rival in this low-margin business.

A logical choice for your portfolio
Yet competition won't stop me from taking a closer look at BladeLogic, which makes software for data center maintenance. Among other things, its tools help set up a server's processing power, storage space, and operating environment to best handle data requests.

Plenty of other vendors have an interest in this market, including Hewlett-Packard. HP spent $1.65 billion to acquire Opsware, a BladeLogic peer, in July. Others, including IBM (NYSE: IBM), still need the expertise. Here's how a Gartner analyst put in December:

If BladeLogic does get acquired, anybody that doesn't have that capability will probably have to build it. This is not a trivial task. This is something Opsware and BladeLogic have spent a lot of time doing. This is not something that can be rushed to market with any shortcut.

If he's right, investors could be sitting on a bargain. BladeLogic trades for roughly 10.4 times sales. HP offered 15 times revenue for Opsware. That discrepancy shouldn't hold; BladeLogic is growing faster today than Opsware was at the time of the HP deal.

But that's my take. What's yours? Would you buy BladeLogic at today's prices? Let us know by signing up for CAPS today. It's 100% free to participate.

See you back here next week with five more top growth stocks. Fool on!