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. Just ask investors who hold shares of JA Solar
No matter. 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 120,000-member Motley Fool CAPS investor-intelligence database.
Specifically, we're looking for stocks that have earned a five-star rating in CAPS (the highest) and 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, most believes will outperform the S&P 500.
Let's have the list
Here are five more top growth stocks:
|
Company |
No. of CAPS Ratings |
Percent Bulls |
5-Year Growth Estimate |
|---|---|---|---|
|
LoopNet |
1,990 |
96.9% |
26% |
|
IPG Photonics |
818 |
98.5% |
25% |
|
Hornbeck Offshore Services |
347 |
97.9% |
22.5% |
|
CommVault |
213 |
97.7% |
21.1% |
|
RRSat Global Comm. |
200 |
97.5% |
21% |
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 have some great companies to work with. IPG Photonics is a great stock for a vertical world. CommVault supports some of the best technology I've ever seen. Hornbeck Offshore Services and its oil and gas logistics business has been here before.
You don't want to be out of the LoopNet
Still, as crazy as it might seem, I'm going with commercial real estate matchmaker LoopNet. Why? Because there's still business to be had. LoopNet finished the June-ended quarter with 29% revenue growth and 623,000 property listings.
Can the good times continue? CEO Richard Boyle is cautious, but also told Fool Rick Munarriz in a recent interview that he and his team are comfortable with higher prices, even now. Quoting Boyle:
Our model historically was a monthly flat fee. If you had one listing, you were paying us a certain fee. If you had 100 listings, you were paying us the same fee. We did that for a reason, as we were building momentum in the business initially, but what we introduced at the end of last year was a gradual tiering where the $89 monthly subscription to the marketing listings right now is for up to four active listings. As you go to five or more listings, the fee scales up in a fairly linear manner.
Time will tell us whether Boyle is right, but a fresh report from the Urban Land Institute and PricewaterhouseCoopers says that the commercial real estate market will deteriorate further next year and perhaps into 2010. Ouch.
The good news? LoopNet has outstanding margins. If Boyle needs to reset prices a la Netflix
But that's my take. I'm more interested in what you think. Would you buy LoopNet 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!
Fool contributor Tim Beyers recently returned from a tour of Silicon Valley with his Rule Breakers teammates, during which time they visited more than a dozen established and emerging innovators. Care to learn more? Just tell us where to send you our updates. It's 100% free.
