You don't need the investing acumen of Warren Buffett or the riches of a trust-fund baby to achieve financial success.

Because the stock market is your best hope for realizing your dreams, start investing today, by putting away small sums of money every month. Then seek out undervalued small-cap stocks for your greatest returns. I like these stocks because they offer opportunities for growth, while still being mostly overlooked by the big investors.

To find these prospects, we'll screen for stocks with market values less than $3 billion, an earnings surprise of 15% or more in the previous quarter, and forecasts for long-term earnings growth of at least 15%. We'll filter our findings through the collective investing wisdom of the 165,000 members in our Motley Fool CAPS community. If the best and brightest CAPS players think these stocks hold potential, we ought to take notice, too.

Here are some of the stocks this simple screen found:


Market Cap

EPS Surprise

Average Analyst 5-Year EPS Estimate

CAPS Rating
(out of 5)

China Digital TV (NYSE: STV)

$355 million

$0.10 vs. $0.08



Smart Balance (Nasdaq: SMBL)

$250 million

$0.05 vs. $0.02



YRC Worldwide (Nasdaq: YRCW)

$311 million

$0.06 vs. ($0.08)



Sources: and Motley Fool CAPS.

Of course, this is not a list of stocks to buy -- just a starting point for more research. We need to look more closely at these companies to see whether analysts' faith in them is well-founded. Still, because the CAPS community's helping us out, favorite selections there might be a good place to begin.

An alternative opportunity
When the government proposed getting rid of rabbit ears for our televisions for good, the demand for flat-panel screens skyrocketed. Corning (NYSE: GLW) made a mint selling screens for LCD TVs, and Dolby Labs' (NYSE: DLB) digital sound technology took control of the market as consumers were forced to upgrade to new digital sets. Dolby's attach rates across Europe are nearly universal now, too, as a result of the conversion there.

That's why many might consider China Digital TV a top turnaround story now. Its shares are trading one-third lower than they were a year ago. Plus, China's government proposes to turn off its analog TV signals by 2015. China Digital TV already owns half the smart-card market in the country, and a forced migration to digital signals would cement its leadership position, though you might want to keep Dolby in mind, too.

More than 96% of the 810 CAPS members rating the company take the bull position. Go to the China Digital TV CAPS page and add your thoughts on the potential.

I'll drink to that
Smart Balance knows which side its bread is buttered on   and is ready to make a 180. The big consumer goods companies like Kraft (NYSE: KFT) and ConAgra got the hint that consumers weren't willing to pay so much in a recession and could use their influence to put downward pressure on prices.

So Smart Balance had to slash its earnings outlook for the rest of the year and wonder about new products like Smart Balance Milk, which didn't catch on as quickly as had been hoped.

Yet the company projects a halo effect for its healthy dairy products, which might just take longer to catch on. After all, soy milk alternative Silk from Dean Foods (NYSE: DF) wasn't an immediate hit, but sales of Silk were up by double-digit rates in the latest quarter, though Horizon Organic Milk still leads the company in sales.

CAPS member silentmercy says it may take a while to turn Smart Balance around, but its product placement is premium.

This looks like a promising stock when the economy recovers. Take a look at your local grocery store shelf and they are prominently displayed, but the pricing when standing in the aisle as a cash strapped consumer other offerings look better. Olivo butter sells for about half of Smart Balance in my store, and carries the same healthy perspective. I really [don't] see this stock moving out of this rut for sometime.

Slimming down
So it goes with trucking giant YRC Worldwide. Once on the brink of filing for bankruptcy protection, the owner of Yellow Transportation, Roadway, and New Penn regained control of its big rigs, though it is still dangerously burning through cash. That could change soon enough; management says it recovered half the business lost to rivals when operations were faltering.

It had better. While YRC Worldwide reported narrower losses in the latest quarter, the national segment's per-day shipments fell 19%, while regional business was off 3.1%. But with Chinese trucking improving and the freight-handling business on the mend, YRC Worldwide might be ready to put the pedal to the metal.

Of CAPS members rating the company, 83% are bullish. Visit the YRC Worldwide CAPS page and let us know if you agree.

Foolish final thoughts
Investing is not brain surgery. Finding good, undervalued companies is not as difficult as the professionals want you to think. You just have to commit to starting now, and do so regularly. Now's the time to begin.

Smart Balance and China Digital TV are Motley Fool Rule Breakers selections. Dolby Laboratories is a Stock Advisor recommendation. Try any of our Foolish newsletter services today, free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.