Growth stocks are the beauties of the stock world, plain and simple. They're exciting, they have good stories, and they can make you a lot of money. Southwestern Energy may be off from its highs lately, but over the past five years, the huge profit growth that this oil and gas exploration company has seen has led to more than 950% gains for its investors.
But for all their beauty, growth stocks are also the prima donnas of the market. They can be erratic, they don't always live up to their billing, and they tend to attract a shareholder base that's ready and willing to run at the first signs of slowdown. For those reasons, caution is certainly in order when you enter the world of growth investing.
Fortunately, The Motley Fool's CAPS service brings us the collective intelligence of a community of more than 115,000 investors and is a great resource for separating the Jessica Albas from the Jabba the Hutts. Each of the stocks competing for this week's top spot has a market cap of at least $100 million and grew its net profit by at least 20% over the past year. So let's go ahead and meet our contestants.
Though Chinese solar stocks may seem old hat to some now, Motley Fool Rule Breaker pick Suntech Power
What to do with all that data ... That's where EMC
What can I say about Microsoft
Service providers like Verizon
The envelope please ...
While a number of CAPS members like WebMD's business, many more are concerned about the stock's valuation and it has ended up with a rock-bottom one-star rating. American Tower may have a very different business, but CAPS members' opinion on valuation is similar to WebMD -- overvalued -- and it is stuck with a two-star rating. And good old Microsoft may have nearly 10,000 CAPS members supporting it, but there are enough that disagree to keep the stock in neutral with a three-star rating.
Suntech Power recently took a tumble as a result of a research report from Goldman Sachs, and many CAPS members (including me!) took this as an opportunity to give the stock a thumbs-up. But Suntech's four-star rating, while positive, keeps it just out of the top spot in this week's growth stock beauty contest.
Who does that leave us with? That's right, EMC. EMC has more than 2,700 fans on CAPS, versus just 126 who think it will underperform the market. One recent EMC fan, CAPS member Beacon10, kept it nice and simple, saying: "EMC has always been a good company. Now is a good time to buy in. If you can get in under $10 even better."
Now go vote!
Do you think EMC has what it takes to be America's next top growth stock? Head over to CAPS and let the rest of the community know what you think.
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Sprint Nextel and Microsoft are Motley Fool Inside Value recommendations. VMware, Suntech Power, and Google are Motley Fool Rule Breakers recommendations. Try any of our Foolish newsletters today, free for 30 days.
Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. The Fool's disclosure policy would surely win America's Next Top Disclosure Policy, but for some reason there's no such contest.