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 JA Solar (Nasdaq: JASO), which yesterday fell more than 5% on no news whatsoever. Sheesh.

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

Percent Bulls

5-Year Growth Estimate

China Medical Tech. (Nasdaq: CMED)




IPG Photonics (Nasdaq: IPGP)




Core Labs (NYSE: CLB)




Central European Dist. (Nasdaq: CEDC)




Basic Energy Services (NYSE: BAS)




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.

We've got some cheap growers to work with. China Medical, for example. Though it has seen a remarkable run since appearing in this column last February -- up more than 60% -- the device maker still sports a very reasonable 0.92 PEG ratio based on projected 2008 earnings.

Give your portfolio laser-like focus
But my top pick today is IPG Photonics, which first appeared in this column last August. At least 350 more Fools have since rated the stock. Nearly all of them believe IPG will beat the market, apparently for many of the same reasons that my Foolish colleague, Karl Thiel, gave when he picked IPG for Rule Breakers last May. Quoting:

Fiber lasers won't overtake older lasers for every application, but as their prices come down and the technology continues to improve, they're appearing in more places. IPG introduced the first 1 kilowatt fiber laser in May 2002. By the end of 2003, it was shipping a 24 kW laser and now has a 50 kW product. It's rumored to be moving toward the military's goal of a 100 kW laser -- a device that could actually blast missiles out of the sky.

That's so geeky it's cool. Mix in superior management, as CAPS investor mlknyu points out, and it's easy to understand why the Fool today owns shares of IPG Photonics. Quoting from mlknyu's recent pitch:

I am extremely impressed with the moves IPG has been making. They're making great use of the capital from their IPO, buying a busload of patents to put a stranglehold on their industry, and expanding the number of research and production plants... In their Rule Breakers interview, IPG said getting into industrials is harder than medical devices, as industrials have [a] less ... innovative attitude towards production than the medical devices world. Well, with things going so slow in Michigan -- remember GM, Ford, Chrysler? -- they'll be giving IPG a serious look.

Color me convinced. But I'm even more interested in what you think. Would you buy IPG Photonics 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!