The Path to Prosperity

The Oracle of Omaha, Warren Buffett, turned an initial bankroll of $10,000 into a multibillion-dollar conglomerate. Shelby Davis began with $50,000 and amassed a $900 million fortune. These inspiring stories give us all hope that we'll be able to achieve our own financial dreams. But what if you don't have $50,000, or $10,000, or even $5,000 to get started?

Fear not, Fool -- you aren't doomed to penury and misery. You don't need a trust fund as big as Trouble's to start securing your financial future. Just follow these four simple steps:

• Start today!
• Invest regularly. Every month, put away $250, $100, even $50.
• Look to the stock market for your best hope of realizing your dreams.
• Seek undervalued small-cap stocks for your greatest returns.

Why small caps?
Small caps offer the greatest potential for market-beating returns. Institutions tend to ignore these tiny stocks, and analysts don't cover them. By the time anyone realizes they're there, they've already grown and appreciated in price. To find these future giants, we'll screen for stocks with:

• Market values less than $2.5 billion, to qualify as a small caps.
• Share prices above $5, to weed out penny stocks.
• An earnings surprise of 20% or more last quarter.
• The prospect of growing earnings at least 20% annually for the next five years, according to analysts.

We'll filter our findings through the collective investing wisdom of the more than 105,000 professional and novice investors in our Motley Fool CAPS community. If the best and brightest CAPS players think these stocks hold potential, then we ought to take notice, too.

Here are some of the stocks this simple screen found:

Sources: Yahoo!; Motley Fool CAPS. Screen results courtesy of MSN MoneyCentral.

Of course, this is not a list of stocks to buy -- just is 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. With the CAPS community helping us, starting with its favorites would be a good place to begin.

Digital convergence
From analog to digital to HD, even the advertising world needs to keep up. DG FastChannel has been consolidating a number of rivals under its umbrella, and rolling out new initiatives to keep on top of technology advancements. It recently sought to acquire the Vyvx advertising services business of Level 3 Communications (NASDAQ:LVLT), among others, while also ensuring that advertisers can broadcast their spots in HD by the February 2009 government deadline for digital conversion.

Investors like CAPS player johnfuller48104 see the convergence as one of several timely factors that ought to propel DF forward:

All catalysts converging including roll up of advertising distribution competitors for immediately accretive prices; 08 is a political year which is particularly bullish in DG's advertising business; most importantly, Feb 09 analog to digital deadline combined with the rapid adoption of HD advertising should make an upside to guidance likely.

Foolish final thoughts
Academics will tell you that individual investors have little chance of beating the stock market. They say the Warren Buffetts, Shelby Davises, and Peter Lynches are the exceptions to the rule. We at The Motley Fool don't agree. Stock investing is not brain surgery. Finding good, undervalued companies is not as difficult as the professionals want you to think.

It is possible to make a more comfortable retirement for yourself, even if you have little money to start with or are starting late in life. It is possible to turn $100 into $1 million. You just have to commit: Do it now, and do it regularly. No amount is too small. Let's get started. There's no time to lose!