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 Citrix Systems, which yesterday fell close to 4% after announcing that several of its online products had won awards. Sheesh.
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 the Rule Breakers team, which scours everything from financial statements to trade magazines to clinical reports in its 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 that 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:
|
Company |
Recent Price |
(5 max) |
Consensus 5-Year |
|---|---|---|---|
|
Alkermes (NASDAQ:ALKS) |
$9.97 |
**** |
34.3% |
|
Synchronoss Technologies (NASDAQ:SNCR) |
$8.60 |
**** |
28.8% |
|
WuXi PharmaTech (NYSE:WX) |
$5.58 |
**** |
25.3% |
|
Atwood Oceanics (NYSE:ATW) |
$14.35 |
***** |
25.0% |
|
Gmarket (NASDAQ:GMKT) |
$13.07 |
**** |
21.4% |
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, if imperfect, companies to work with. Drug developer Alkermes recently failed to win approval for a diabetes treatment it has created in concert with Amylin Pharmaceuticals. Synchronoss Technologies, best known for its iPhone activation tools, gets mixed shareholder reviews. Offshore driller Atwood Oceanics shows all the signs of a stock on sale. And R&D contractor WuXi PharmaTech could be a monster stock.
If you can't beat 'em, buy 'em
My favorite this week, however, is South Korea's Gmarket, a regional auction site that shares a common thread with Argentina's MercadoLibre (NASDAQ:MELI) and eBay (NASDAQ:EBAY). The U.S. e-auctions king already owns a piece of MercadoLibre and, as of August, was pursuing a stake in Gmarket.
A deal would make sense. eBay has been unable to beat Gmarket on its home turf and earns lower returns on invested capital than its Korean peer.
"There's no denying that eBay needs to be the top dog in a region for its network effect to really make its consumer-to-consumer marketplace work. Coming up short in Japan and China has been reason enough to retreat out of key markets instead of meander about as the silver medalist," wrote Foolish colleague Rick Munarriz back in August, when talk of a deal was a lot more lively.
Some of our best CAPS investors like Gmarket's position as much as Rick does. Of the last 10 All-Stars to rate the stock in CAPS, eight said it will outperform.
I think they're right, but I'm more interested your take. Would you buy Gmarket 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!
