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. Life Partners Holdings may be off from its highs, but it is up over 350% over the past three years while the rest of the market tanked.
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 over 115,000 investors and is 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 grew its net profit per share by an average of 20% or more per year over the past three years (you can also run the screen for yourself). So let's go ahead and meet our contestants.
The pharmacy benefit management space is a highly competitive one. But it may not matter that Express Scripts
What can I say about Apple
When it comes to helping oil companies reach oil deep under water, Transocean
Quality basic cotton clothing may not seem all that impressive, but it's meant big bucks for American Apparel
Cable companies are not the monopolies they once were, and DirecTV
The envelope please ...
The voting is in and the CAPS community members have shared their opinions. Right off the bat, American Apparel is getting voted off the island. Though the stock does have some supporters on CAPS, many members are concerned about the valuation and whether the company's clothes could be a fad. The mediocre three-star ratings for Express Scripts and DirecTV mean that those two are the next to be voted off the island.
Apple's cachet and growth momentum have helped it achieve four-star status, but it wasn't quite enough to bump Transocean from the top spot. Transocean has been rated by over 5,200 CAPS members, 5,121 of whom have given it a thumbs-up. Back in September, DemonDoug, one of CAPS' top members, joined the Transocean bulls and said: "Ahh, Transocean. How long have I waited for you to come down to more reasonable valuation levels? A year at least. Best ocean based drilling company in the world. Oil baby, oil."
Now go vote!
Do you think that Transocean 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.