As I'm a member of the Motley Fool Rule Breakers research team, few will mistake me for a deep-value investor. I prefer turnover to turnarounds. I define the C in DCF as "catalysts." I find more investing ideas in lists of heavily shorted stocks than among fresh 52-week lows.

Despite all this, I am no spendthrift. I'm passionately cheap. The catch is that I see great prices in growth stocks. I think that's important. Value investors may have been jumping all over real estate developers last summer when they seemed to be trading at single-digit P/E multiples. What happened? Earnings crashed, multiples contracted, and homebuilder stocks fell even further.

I prefer to hitch my portfolio's wagon to stocks that are growing. You can try your luck at nailing the top and bottom of cyclical stocks, but I won't. Why should I, when there are just way too many bargains out there from stocks that have consistently delivered the goods?

Five for the road
Now that we're wrapping up 2008, we're starting to get a handle on forward estimates for fiscal 2009. Let me run a few names past you. Tell me if you thought they were trading for higher forward multiples than they actually are.

 

Recent Price

Next Year EPS

Forward P/E

First Solar (NASDAQ:FSLR)

$111.20

$7.18

16.9

China Finance Online (NASDAQ:JRJC)

$8.00

$1.12

7.2

Baidu.com (NASDAQ:BIDU)

$118.09

$6.02

21.4

WWE (NYSE:WWE)

$11.57

$0.74

15.5

Hansen Natural (NASDAQ:HANS)

$28.82

$2.09

14.3

Data from Yahoo! Finance.

Finding growth stocks with 2009 profit multiples running in the teens -- and even single digits -- isn't necessarily cheap in and of itself, but dig a little deeper to appreciate what some of these companies are doing.

China Finance Online and Baidu are cashing in on the world's most populous nation migrating online. First Solar is leading the charge in the solar energy revolution. Hansen is still winning over energy drink sippers with its canned Monster beverages. World Wrestling Entertainment continues to crank out engaging storylines for its colorful grapplers.

All five companies are growing, with analysts expecting healthy advances beyond that. If you're looking for bigger names, enterprise software giant Oracle is now fetching just 11 times next year's earnings. Style oozer Apple (NASDAQ:AAPL) is now fetching a forward earnings multiple in the midteens.

These are growth stocks, yet they are fetching multiples that seem a better fit with sleepy utility stocks. So how can these not be the cheapest stocks that you know, too?

I'm sorry: They're affordable.

Buying the right kind of growth stock
The companies that I consider -- heck, demand to be considered -- cheap are growing at incredible rates, yet they're priced as if they were only modestly above average. They also have a history of blowing past analyst profit targets, so the forward-looking estimates have a pretty good chance of being revised higher in coming quarters.

That's where I want to be. Yes, Rule Breakers is a growth-stock newsletter service. Dig deep into the scorecard and you'll find:

  • Two of China's biggest online multiplayer game makers, with ridiculously wide profit margins, trading for just 10 times next year's projected earnings.
  • A luxurious pampering services specialist fetching just 10 times forward profitability.
  • Two of the five stocks I mentioned earlier -- China Finance Online and Baidu.com -- continue to have bright futures and do, in fact, look cheap in my book.

Growth stocks are the greatest value stocks I know. Remember when Google went public at $85 in the summer of 2004? Did you think it was overpriced at the time? If so, you weren't alone.

But no one knew that the company was positioning itself to earn $21.68 per share come 2009. Those who got into Google early snapped up a stake in the paid search giant for just 3.9 times next year's profits.

Getting in early on the right growth stocks is the key. Just your luck -- the growth-stock kissing booth doesn't have much of a line these days. Pucker up, my friend.

If you want to unearth the other "potentially cheap" stocks in the newsletter, punch in now for a free, 30-day trial offer.

This article was originally published Feb. 15, 2007. It has been updated.

Longtime Fool contributor Rick Munarriz does not own shares in any of the companies in this story. Apple is a Motley Fool Stock Advisor recommendation. China Finance Online, Google, and Baidu.com are Rule Breakers picks. The Fool has a disclosure policy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.