Growth stocks are the beauties of the stock world, plain and simple. They're exciting, they have good stories, and they can make you a lot of money. Motley Fool Rule Breakers pick Sohu.com may have taken a hit with the rest of the market recently, but the expansion of China's Internet-connected population has carried investors to big gains over the past three years.
But for all their beauty, growth stocks are also the prima donnas of the market. They can be erratic, they don't always live up to their billing, and they tend to attract a shareholder base that's ready and willing to run at the first signs of slowdown. For those reasons, caution is certainly in order when you enter the world of growth investing.
Fortunately, The Motley Fool's CAPS service brings us the collective intelligence of a community of more than 115,000 investors. It's a great resource for separating the Jessica Albas from the Jabba the Hutts. Each of the stocks competing for this week's top spot has a market cap of at least $100 million, and each grew its net profit per share by an average of 20% or more per year over the past three years. (If you like, run the screen for yourself.) With those criteria set, let's go ahead and meet our contestants.
Not only is the world population growing, but it's also getting richer. These two trends have led to increased demand for grains, both for direct consumption and as animal feed. Hoping to make the most of their land, farmers depend on the fertilizer components that PotashCorp
Stand down, IBM. Outta the way, Dell
With consumers struggling mightily, purses and other luxury accessories are on the way out ... aren't they? Coach's
Thermo Fisher Scientific
Sometimes internal growth puffs up income; at other times, a massive acquisition will do the trick. Thermo Fisher Scientific
If you watch cable TV or surf the internet in the U.S., there's a chance that you're paying a bill to the largest U.S. cable provider -- Comcast
The envelope please ...
The voting is in, and the CAPS community members have shared their opinions. Comcast is the first stock to get the boot thanks to its two-star rating. Though Comcast has the opportunity to upsell current customers, many CAPS members think that the company is a bit fat and lazy, believing it will suffer from increasing competition from the likes of Verizon
While the three-star rating on Hewlett-Packard isn't terrible, it's hardly a ringing endorsement on the stock. Bearish CAPS members see the commoditization of PCs and printer ink taking a bite out of HP's profits. Meanwhile, both Coach and PotashCorp weighed in with very respectable four-star ratings. This high rating means that both are well worth checking out, but there are some CAPS members who foresee the economy weighing heavily on both businesses.
In the end, Thermo Fisher Scientific seems to have blinded the CAPS community with science. More than 97% of the members who have weighed in on Thermo Fisher gave the stock a thumbs-up. Among those bulls is one of CAPS' top players, TMFHelical, who gave the stock an outperform rating way back in July of 2007, writing:
Powerhouse in the biotechnology support industry. From lab supply to CRO activities, [Thermo Fisher Scientific] feeds the supply chain of biotech drug development from discovery into the clinic.
Now go vote!
Do you think Thermo Fisher Scientific has what it takes to be America's next top growth stock? Head over to CAPS and let the rest of the community know what you think.
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Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. The Fool's disclosure policy would surely win America's Next Top Disclosure Policy, but for some reason, there's no such contest.