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 Motley Fool Stock Advisor selection Double-Take Software (NASDAQ:DBTK), which on Wednesday fell more than 4% on no news whatsoever. Sheesh.

No matter. 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 the Rule Breakers team, which scours 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 four- or five-star rating in CAPS and which are expected to grow their earnings by at least 20% annually over the next five years. Four- and five-star stocks are those that the community, on the whole, believes will outperform the S&P 500.

Let's have the list
With that preamble behind us, here are five more top growth stocks:


Recent Price

CAPS Stars

(5 max)

5-Year Growth Estimate

thinkorswim Group (NASDAQ:SWIM)








LongTop Financial Tech. (NYSE:LFT)




IntercontinentalExchange (NYSE:ICE)




China Mobile (NYSE:CHL)




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 interesting companies to work with. China Mobile has been poised to pop since the summer. Investor educator thinkorswim saw higher trading volume last month. LongTop Financial was a smoking-hot IPO last year at this time. And InterContinentalExchange got a big CAPS upgrade in September.

A stock with good genes
My favorite, though, is biotech Celgene, one of the market's 10 best stocks of the past decade. CAPS All-Star zzlangerhans captured my interest with this November pitch:

I want to take advantage of the downturn and pick up some quality stocks at depressed prices, but I don't want to sacrifice my pure biotech profile. Therefore, I'm branching out into large profitable biotech companies even though I don't really have the capability to valuate them based on traditional metrics. Vidaza should assume a larger share of the MDS market now that they have established a mortality benefit and Supergen's Dacogen failed to do the same. Between that and historical performance I'm hoping for 10-20 points from this pick. [Emphasis added.]

If that seems like a lot, consider that Celgene has a massive pipeline of cancer drugs that could prove attractive to Pfizer (NYSE:PFE) or another major pharmaceutical company. Plus, at 23 times estimated 2009 earnings, the stock trades at a discount to its expected growth.

What's that mean, exactly? Not much lately. Since the summer, Wall Street's (ahem) estimates have been about as useful as a fork for eating soup. Even so, with this much of a chasm -- a 23 forward P/E compared with 38% long-term estimated growth -- I suspect that a lot would have to go wrong for investors to see substantial losses from here. And yet the upside is ... well, you read zzlangerhans' pitch.

But that's one Fool's opinion. I'm more interested to know what you think. Would you buy Celgene at current prices? Would you short it? 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!

On Jan. 12, 2009, Fool co-founder David Gardner, Jeff Fischer, and their Motley Fool Pro team will accept new subscribers to their real-money portfolio service. Motley Fool Pro is investing $1 million of the Fool's own money in long and short positions in a range of securities, including common stocks, put and call options, and exchange-traded funds (ETFs). They also incorporate proprietary CAPS "community intelligence" data into their research. To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.

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.