Investors are always hunting for the next big stock -- the dream stock whose price increases several times over when the market finally discovers it. It's easy to look back and see what the 10 best stocks of the past decade were. But I'm more interested in a tool that can help investors find new stock ideas and help evaluate tomorrow's greatest companies.

One place offers a variety of resources to help find tomorrow's leaders: Motley Fool CAPS, a 125,000-member community of investors helping one another beat the market.

We'll enlist CAPS to screen for contrarian stocks and get the story behind some of the more highly rated companies. CAPS' nifty screener will help us find stocks with:

  • A market cap of at least $500 million.
  • A long-term debt-to-equity ratio of less than 0.5.
  • A share price at least 50% below its 12-month high.
  • An earnings-per-share growth rate of at least 15% over the past three years.
  • A price-to-earnings ratio of less than 25.

Then we'll tap the collective intelligence in CAPS to see whether these companies present real opportunities -- or whether the numbers don't tell the true story.

Opinions with the numbers
Below is a sample of stocks our screen returned. You can run this screen yourself -- remember, though, that your results may differ from ours as the market changes.


EPS Growth Rate, Past 3 Years

% Below 12-Month High

CAPS Rating (out of 5)

Flowserve (NYSE:FLS)




Schlumberger (NYSE:SLB)




Intuitive Surgical (NASDAQ:ISRG)




Diana Shipping (NYSE:DSX)




Data and star rankings from CAPS as of Feb. 27.

Despite reduced capital and infrastructure spending during this crisis, pump maker Flowserve continues to gain new business because of its diverse geographic mix and expanding reach. Increased sales drove earnings up 19.3% for the fourth quarter, beating expectations. The company also noted that backlogs were up 24% to $2.83 billion at the end of the year, and with a strong outlook for 2009, it decided to raise its quarterly dividend by 8%. And despite a big fall in the stock over the past year, many CAPS members are bullish on the demand for Flowserve's products, which are a crucial part of the oil, water, and nuclear industries. Today, nearly 98% of the 701 CAPS members rating Flowserve expect it to outperform the market.

Sliding crude prices have presented challenges for oil-related companies, but oil services ones like Schlumberger, Weatherford (NYSE:WFT), and Halliburton (NYSE:HAL) pulled off respectable quarters despite volatility in crude prices. Year-over- year fourth-quarter earnings for Schlumberger were down, but for the full year, revenue grew 20% because of strong demand in international markets like Latin America and Europe. Recent exploration and production hasn't made substantial improvements to supply, but the company expects strong service activity when the demand for oil eventually rebounds. A solid number of CAPS members see a turnaround, too: 97% of the 2,673 members rating Schlumberger see it beating the market.

Intuitive Surgical
Hospitals have cut back on capital spending, prompting medical device makers like Medtronic and Hologic (NASDAQ:HOLX) to cut revenue estimates. Surgical robot maker Intuitive Surgical expects flat system sales in 2009, but overall revenue growth will be around 15% because half of its revenue comes from service contracts and accessories sales. Many CAPS members argue -- and I agree with them -- that delayed hospital spending will create pent-up demand. Also, Intuitive Surgical has room to grow in the hysterectomy and prostatectomy markets, so 95% of the 3,716 CAPS members rating it are bullish and think it's a great buy today.

Diana Shipping
While unease has settled in the dry-bulk shipping sector over contract defaults, Diana's business is largely with high-quality charterers like Cargill and BHP Billiton, with most of its vessels chartered in the long-term market. Its quarterly revenue jumped 43% and earnings rose 49% from a year earlier, and the company has one of the stronger balance sheets in the sector. As such, 97% of the 2,030 CAPS members rating Diana Shipping see it beating the S&P.

Let 125,000 members be the judge
The collective wisdom of a huge pool of investors can help give context to a page of numbers developed through a stock screen. But even with an entire community of qualified opinions acting as the judge, individual investors are still the jury and should perform their own due diligence.

Run your favorite factors through the Motley Fool CAPS screener. It's totally free, and we think you'll like the results.