7 Stocks With a Bright Future

Investments that have been successful over the long term almost assuredly share at least one thing in common -- growth. You'll be able to find very few companies that have been unable to increase their earnings, yet still have produced good returns for shareholders.

Think about it this way. Dividends aside, investors reap their gains when a company's stock price goes up. The stock price is typically driven by two levers: earnings, and the multiple that investors are willing to pay for those earnings. Since earnings multiples tend to fluctuate within a certain range, long-term investors should have a keen focus on the company's ability to increase earnings.

Does that seem too simple? Sometimes, keeping it simple can be a good plan. After all, as Third Avenue's Marty Whitman has put it:

Based on my own personal experience -- both as an investor in recent years and an expert witness in years past -- rarely do more than three or four variables really count. Everything else is noise.

With that in mind, I've kept it simple and dug up five stocks that analysts expect will notch long-term earnings growth of 10% or better. I've also pulled up the CAPS rating for each stock to show what the 145,000-member Motley Fool's CAPS community thinks of the company's prospects.

Sources: Capital IQ (a division of Standard & Poor's), Yahoo! Finance, and CAPS. P/E = price-to-earnings ratio.

Wall Street analysts aren't known for their supernatural forecasting skills, so these estimates may not all pan out. However, this list may be a good place to dig in for further research. I'll even get you started with some thoughts on a couple of these stocks.

Cool to the touch?
Hey, I certainly can't blame people for being a little gaga over Green Mountain. The company's stock has been one of the best-performing stocks over the past five years, racking up an amazing 1,000%-plus return. Green Mountain's innovative Keurig coffee-brewing system has been making waves in the coffee industry, which led to the stock being named part of the Motley Fool Rule Breakers portfolio.

However, five years ago, investors were paying a trailing price-to-earnings multiple only in the low 20s for the stock, whereas today, they have to cough up for a multiple in the high 40s. At the same time, there are signs that the gravy train could be slowing down a bit -- a potential reason that the company engaged in a bidding war for Diedrich Coffee. (Diedrich announced on Tuesday that it was being acquired by Green Mountain, rather than Peet's Coffee & Tea, in a $35-per-share offer.)

On CAPS, the stock carries a bottom-rung one-star rating. Last month, CAPS All-Star tortillatree joined the bears and lashed out at the acquisition of Diedrich:

Solid company, but they're making a big mistake with their bid for [Diedrich]. They're overpaying, and they're buying a technology they already own, so they're pretty much paying for nothing. [Diedrich] also makes the "cadillac" of coffee roasters, and that's cool....but right now no one is buying cadillacs.

Still want to test the Green Mountain waters? Fellow Fool Jeff Fischer suggested protecting the downside in a stock like this with options, and I think he may be on to something.

Bringing the heat
But what about high growth and a high rating from the CAPS community? For that, we can turn to IntercontinentalExchange (ICE).

Stellar growth, stability through the downturn, and screamingly high margins -- how does IntercontinentalExchange do it? The company is a major player in the electronic futures and over-the-counter markets. That means that when big money is being thrown at products like oil futures or credit default swaps, there's a good chance that it's going over ICE's electronic platform.

Volatility is a gold mine for a company like ICE, and we've seen plenty of that in recent years. And with the financial world still walking on eggshells in this not-quite-recovered global economy, I think it's a safe bet that we're going to see more of that volatility.

On CAPS, ICE has 774 outperform ratings against just 41 underperforms. Community member Bouillon has been a fan of the stock since mid-2007 when this All-Star said: "I am a firm believer in automated and electronic traders, and these guys are in the pioneering forefront. Thumbs up!"

But what do you think?
Do these stocks have what it takes to post solid growth in this economy? Or have analysts been too optimistic? Head over to CAPS and let the community know what you think of Green Mountain, IntercontinentalExchange, or any of the other stocks listed above.

We could say a lot about the Federal Reserve's policies, but one thing I think we can say for sure is that the Fed is telling us to buy stocks.