Are you really a growth investor?

It's a question 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 The Knot (NASDAQ:KNOT), which yesterday fell more than 9% after announcing new websites tailored to the nation's top markets. 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
Now, with that preamble behind us, here are five more top growth stocks:



CAPS Rating
(5 stars max.)

5-Year Growth

MercadoLibre (NASDAQ:MELI)




Yingli Green Energy (NYSE:YGE)








Chart Industries (NASDAQ:GTLS)




Albany Molecular Research (NASDAQ:AMRI)




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 some interesting companies to work with. Former Rule Breakers pick PDL BioPharma recently settled a testy patent dispute. Fellow biotech Albany Molecular may have been downgraded, but it still trades for less than its expected long-term growth rate. Chart Industries has a history of treating its shareholders right. And Yingli Green Energy was selling for half-price in Oct. and hasn't gained much since.

A spicy alternative to an auction business gone bland
But it's MercadoLibre, Brazil's answer to eBay (NASDAQ:EBAY), that most interests me today. And not just for its growth prospects. MercadoLibre's management has proven far smarter than I gave them credit for a year ago:

I'm rarely a fan of secondary offerings. Too often, early backers use them to cash out their holdings. We don't yet know if that's the case here, but with a strong balance sheet and a history of free cash flow, MercadoLibre doesn't appear to need this much fresh capital.

I still don't like secondary offerings or needless dilution. But if you're going to accumulate capital, you do so when it's least expensive to existing shareholders -- when your stock trades at a premium. Mercadolibre was trading for more than $40 a share at the time of its offering. Very smooth.

Is the stock a bargain today? Nine of the last 10 CAPS All-Stars to rate MercadoLibre say it will outperform the market. And the one who red-thumbed it, TSIF, is reconsidering after being presented further data by CAPS peer muchthought.

"I suspect [Mercadolibre] should have a great partnership with [eBay] if it opens the market to them easier than they could on their own," TSIF wrote recently. "So again, thank you for the information. Like a batter swinging at the first pitch, I'll keep a closer eye on my tossing out Picks and Pitches that CAPS sticks up in front of me!!!!"

Very Foolish idea, I think. But I'm more interested your take. Would you buy MercadoLibre at current 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!

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.

Fool contributor Tim Beyers is slowly recovering his CAPS rating. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out his portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool.

Tim seeks the best of the tech as a contributor to Motley Fool Rule Breakers, which counts The Knot among its recommendations. EBay is a Stock Advisor selection.

The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy overcame its growing pains years ago.