5 More Unloved Growth Stocks

Ah, the joys of skepticism.

We rebel investors at Motley Fool Rule Breakers believe that multibaggers in the making, while not often cheap by the numbers, are always misunderstood. The extraordinary skepticism they face makes them excellent value stocks.

Hitting just one of these home runs can make all the difference to your portfolio. Just ask David Gardner, who bought Amazon at a split-adjusted price of $3.24 a share in 1997. He's up more than 2,100% since.

It's stocks like Amazon that helped David produce nine years of better-than-20% average annual returns in the real-money Rule Breaker portfolio, even while suffering stinging losses from Guitar Center and 3Dfx, among others.

Let the haters be your friends
David continues this home run investing tradition today at Rule Breakers. You can follow the moves of his rebel alliance with a free trial of the service. Or, if you prefer to pick your own stocks, there's Motley Fool CAPS, a 100% free stock-picking community where more than 83,000 participating investors rate stocks on a scale of one to five stars. More than 5,300 rated stocks are in the database right now.

How can this help you? Each week, using CAPS, we'll search for one- and two-star stocks that have at least 5% of their available shares sold short but are expected to grow their earnings by no less than 15% over each of the next five years.

Let's have the list
Here are today's unloved growth stocks:

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 teen retailer Abercrombie & Fitch for its reasonable valuation -- as expressed in a 0.98 PEG ratio -- and because peers such as Guess? (NYSE: GES) have been vastly oversold.

Come on, Isilon
But today I'm willing to take another whack at Isilon Systems, which makes storage systems for non-transactional data such as audio, video, and photos.

That's not an easy position to take. Deep pessimism exists as to whether this upstart can succeed against the likes of Hewlett-Packard (NYSE: HPQ) and Hitachi. CAPS investor kaputnikov put it this way in October:

Isilon's product doesn't target the vital part of enterprises (ERP/database, etc.) where price is secondary. Instead, Isilon targets the high-capacity areas, which [are] price-sensitive -- and they target companies (media) which have huge capacity needs -- but [which are] never willing to pay a lot ... And this will [mess up] Isilon's margins -- and profits.

Perhaps. Trouble is, the big storage suppliers aren't doing a great job of providing products for non-transactional data. Look at Isilon's results: revenue has more than doubled in each of the past three years. So long as that continues, free cash flow, and thus higher stock prices, should follow.

But that's my take. What's yours? Would you buy Isilon 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 for five more unloved growth stocks.