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 Ikanos Communications
That's why all-star investors bet on growth over the very long term. They know that:
- Businesses that make investors billions always begin as growth stocks.
- The best of them feature massive and identifiable competitive advantages.
- 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 that are expected to grow their earnings by at least 20% annually over the next five years. Five-star stocks, the highest, are those that the community, on the whole, thinks will most outperform the S&P 500.
Let's have the list
Now, with that preamble behind us, here are five more top growth stocks:
|
Company |
CAPS |
Percent Bulls |
5-Year Growth |
|---|---|---|---|
|
Mindray Medical |
***** |
98.4% |
42.8% |
|
America Movil S.A.B. |
***** |
98.7% |
28.7% |
|
Tongjitang Chinese Medicines
|
***** |
98.4% |
23% |
|
Satyam Computer |
***** |
98.7% |
20.6% |
|
Actuate |
***** |
97.6% |
20% |
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. America Movil, one of Latin America's largest mobile operators, may have taken a siesta in the first quarter, but it trades for roughly 18 times next year's earnings, or a bit more than half of its long-term growth rate. I'd call that a John Neff-sized opportunity for multiple expansion.
Your portfolio won't mind this stock
But, as a growth grabber, I'm even more interested in Rule Breakers recommendation Mindray Medical. I'll let perennial CAPS All-Star pennysplants explain the thesis, which she presented in March:
Competitive advantages, dedication to R&D, BOTH Chinese and international markets / sales force, stellar management (all things considered), good balance sheet / financial health, and in a sector which is growing by leaps and bounds (tho margins may decline) ... Any wonder this is my 4th reup?
I'm not wondering. Not about that, at least. I'm looking at Mindray's returns on capital and equity and wondering why I haven't invested. See for yourself:
|
Metrics |
TTM* |
2007 |
2006 |
2005 |
|---|---|---|---|---|
|
16.8% |
15.1% |
16.9% |
26.6% |
|
|
26.1% |
24.1% |
26% |
43.5% |
Source: Capital IQ, a division of Standard & Poor's. *Trailing 12 months.
But that's my take. I'm more interested in what you think. Would you buy Mindray Medical at today's prices? Let us know by signing up for CAPS today. It's 100% free to participate.
See you back here in two weeks with five more top growth stocks. Fool on!
