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 130,000 investors and is a great resource for separating the Hugh Jackmans 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. (Run the screen for yourself, if you like). Let's go ahead and meet our contestants.
Does it seem strange to think of a railroad operator such as Union Pacific
If you've lost your way searching for growth stocks, maybe Garmin
Financial distress and the potential for inflation are like catnip to gold buyers. Many investors have flocked to the metal recently under the assumption that it is one of the few assets that will hold its value as the financial windstorm continues to whip everything else around. Such turbulence has been a major boon to Goldcorp
Whether we're talking about Schlumberger
Green Mountain Coffee
Every once in a while a company comes along and does something out of the blue to put some pizzazz in a relatively simple product. Starbucks
The envelope please ...
The voting is in and CAPS community members have shared their opinions. Right off the bat, Green Mountain is getting booted from the island. While the growth at Green Mountain has been tasty, many CAPS members think the stock's price has begun to get bitter and have stuck it with a two-star rating (out of a possible five).
Garmin and Goldcorp will quickly follow on Green Mountain's heels. The three-star ratings that both stocks sport suggest that on the whole the community is less than excited about their prospects.
Union Pacific, on the other hand, has generated a bit more interest from the community, enough to garner it four stars. The perceived safety of rail transportation as a business, along with a price-to-earnings ratio of 10 has inspired a lot of thumbs-up for the railroader.
Although Union Pacific may have its draw, it wasn't able to derail the CAPS community's unwavering love of the oil and gas industry. Like many other energy stocks on CAPS, Schlumberger sports a perfect five-star rating and has garnered the support of more than 2,600 CAPS members.
Best of breed company. P/E at 8.x its not going to get much lower than that. Yes oil prices are down, but 1) for how long? and 2)it will not impact SLB this much in the long run, it could actually help as they help companies getting the best of EXISTING fields, I actually think they will see an increase in reuse of their expertise. I'm in.
Now go vote!
Do you think that Schlumberger 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.
Green Mountain Coffee Roasters is a Motley Fool Rule Breakers recommendation. Garmin is a Global Gains selection. Starbucks is a choice of Stock Advisor and Inside Value, and the Fool owns shares of it. 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.