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.
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 130,000 investors and is a great resource for separating the Han Solos from the Jabba the Hutts. Each of the five 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 run the screen for yourself). So let's go ahead and meet our contestants.
As we might expect from a player in the biotechnology sector, Motley Fool Stock Advisor pick Biogen Idec
If a relatively obscure business model is what you're looking for, Copart
If I wanted to keep this short and sweet, I could simply say that Baidu
The teen retail world may be a tough place to live these days, but Aeropostale
Suntech Power Holdings
You want growth? Suntech Power
The envelope please ...
The voting is in and CAPS community members have shared their opinions. Right off the bat, Aeropostale and its two-star rating is getting the heave-ho. Interestingly, many CAPS members have given the stock a thumbs-down precisely because the company has held up so well in the recession. Their logic seems to be that the gravity-defying performance can't go on forever and sales will eventually take a dive.
Baidu and Biogen Idec -- each sporting a mediocre three stars -- are next to go. While there are quite a few fans of Baidu on CAPS, there do seem to be some concerns about the company's conduct as well as its rich valuation.
Solar hopeful Suntech Power put up a good fight -- it has more than 4,200 outperform ratings on CAPS and many CAPS members see it as a best of breed among the Chinese solar manufacturers. However, its four-star rating wasn't quite enough to overcome this week's champ, Copart.
Copart is a solid five-star stock on CAPS and has raked in 1,501 outperform ratings versus just 37 underperforms. For the call on this remarkable auto remarketer, here's CAPS All-Star poinkie, who gave the stock a thumbs-up back in October of last year:
My daily commute takes me directly past the newest [Copart] location. As I wait at the stoplight, I get to count the cars. What began as 1 car parked out front has become a steady flow of vehicles of all sorts moving through the lots. I see more employees and the steady flow of increased new products. We can't finance new, let's fix up our used. Strong business model for the current economy.
Now go vote!
Do you think that Copart 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.
Baidu, Google, and Suntech Power Holdings are Motley Fool Rule Breakers picks. Biogen Idec and Copart are Motley Fool Stock Advisor recommendations. The Fool owns shares of Copart. Try any of our Foolish newsletters today, free for 30 days.
Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. You can check out the stocks that he's keeping an eye on by visiting his CAPS portfolio, or you can connect with him on Twitter @KoppTheFool. The Fool's disclosure policy would surely win America's Next Top Disclosure Policy, but for some reason there's no such contest.