Are you really a growth investor?

It's worth asking. Fast-moving tech stocks have taken a beating recently, 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 AuthenTec (Nasdaq: AUTH), which yesterday fell more than 8% 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

Helix Energy Solutions (NYSE: HLX)




Techwell (Nasdaq: TWLL)




ValueClick (Nasdaq: VCLK)




II-VI (Nasdaq: IIVI)




Silicon Image (Nasdaq: SIMG)




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 tempted to go with small-cap superstar and laser specialist II-VI, which has been a favorite stock of our Scrooge screen and, with a 1.08 PEG ratio, could still be undervalued.

Let your portfolio eat chips
But I think the opportunity for II-VI pales when compared with the opportunity ahead for Silicon Image investors. Foolish colleague Anders Bylund put it best here, I think:

Every HDMI and DVI connection means license revenue for this spunky little innovator, which sits on a fat load of patents. So let Texas Instruments (NYSE: TXN), Analog Devices, and Conexant fight over HDMI connector market share -- they all have to share the loot with Silicon Image anyhow.

What Anders means is that the forthcoming proliferation of high-definition devices, no matter who makes them, means more moola for the good folks at Silicon Image.

And the patents that protect this budding revenue stream? There's good news there, too. Last week, while denying an injunction against peer Analogix Semiconductor, which Silicon Image is suing for patent infringement, a judge said that the company had "demonstrated a strong probability of success" in proving misappropriation at trial. If true, this would serve as further proof of the durability of Silicon Image's competitive advantage.

For CAPS investor ChipGeek, it's an advantage worth preserving. Quoting from his September 2006 pitch:

This company stands to benefit from several different growth drivers: the growth of the consumer electronics HD craze (HD DVD, BluRay, etc.), the growth of the media-rich PC, and the growth of protected digital content in the home.

But that's one Fool's take. What's yours? Would you buy Silicon Image 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!

II-VI is a Hidden Gems pick. You can try this market-beating service free for 30 days. There's no obligation to subscribe.

Tim Beyers, who is ranked 12,772 out of more than 81,000 participants in CAPS, is a regular contributor to and Rule Breakers. Tim didn't own shares in any of the companies mentioned in this article at the time of publication. Find Tim's portfolio here and his latest blog commentary here. The Motley Fool's disclosure policy is your portfolio's competitive advantage.