Investors are always hunting for the next big stock -- the dream stock whose price increases several times over when the market finally discovers it. It's easy to look back and discover the 10 best stocks of the past decade. I'm more interested in tools that can help me evaluate tomorrow's greatest companies.
Motley Fool CAPS offers a variety of resources to help Fools find tomorrow's leaders. Our community of 135,000-plus members is full of investors helping one another beat the market.
We'll enlist CAPS to screen for growth stocks, then get the story behind some of the more highly rated companies. CAPS' nifty screener will help us find stocks with:
- A market cap of at least $500 million.
- A trailing three-year earnings-per-share growth rate of at least 25%.
- A trailing three-year revenue growth rate of at least 25%.
- A price-to-earnings ratio of less than 25.
Then we'll tap the collective intelligence of our CAPS members to see whether these companies present real opportunities -- or whether the numbers fail to tell the complete story.
Opinions with the numbers
Below is a sample of stocks our screen returned. You can run this screen yourself -- remember, though, that your results may differ from ours as the market changes.
| Company | EPS Growth Rate, Past 3 Years | Revenue Growth Rate, Past 3 Years | CAPS Rating |
|---|---|---|---|
| Aircastle (NYSE: AYR) | 25.5 % | 67.9% | ***** |
| MarkWest Energy Partners LP (NYSE: MWE) | 59.5% | 33.6% | ***** |
| FLIR Systems (Nasdaq: FLIR) | 31.4% | 26.2% | ***** |
Data and star rankings from CAPS as of Aug. 14.
Aircastle
Aircastle has a fleet of 131 Boeing and Airbus passenger and freighter aircraft that it leases to operators worldwide, and although the lease market has been challenging, all of its aircraft are currently on lease. Additionally, it has only one unplaced aircraft with a lease expiry this year and just 18 placements in its entire fleet to complete through the end of 2011. In a difficult economy that still pressures major airlines like Southwest (NYSE: LUV) and Continental (NYSE: CAL), Aircastle is managing its portfolio conservatively, and its entire portfolio of planes has long-term financing with no short-term debt maturities. Due to its solid capital structure and ability to access capital markets, the company sees numerous opportunities to grow by picking up aircraft from struggling owners on the cheap. Despite the rough conditions in the airline sector, 93% of the 459 CAPS members rating Aircastle expect it to outperform the market.
MarkWest Energy Partners LP
Just like its E&P partners, midstream natural gas player MarkWest Energy Partners LP has been hammered by lower natural gas prices, but in its most recent quarter it still posted a narrower loss than last year's comparable quarter. It experienced a 38% increase in natural gas liquids sales at its southwest segment, and the company anticipates gas volumes to grow significantly in southwestern Pennsylvania in the second half of this year and into 2010. It's invested a substantial amount in a gathering and processing backbone in the Marcellus Shale that will allow it to significantly expand to meet the expected massive production growth there. In addition to having strong relationships with successful producers such as Range Resources in the Marcellus, it's also positioned well to capture growth in areas such as the Haynesville Shale, the Woodford Shale, and the Granite Wash. With all the gas out there to be had, more than 96% of 268 CAPS members rating MarkWest Energy Partners are bullish.
FLIR Systems
Not all companies have been battered and bruised in the recession. Thermal imaging and infrared camera systems maker FLIR Systems posted a 6.5% increase in year-over-year second-quarter revenue and recently scored a contract to provide infrared optics to the Indian Air Force that will be installed on Lockheed Martin (NYSE: LMT) C-130J surveillance aircraft. CAPS members like FLIR's staying power and future growth potential, and they see long-term demand for its products across multiple industries. The company boasts strong financials and has a five-star CAPS rating similar to its former competitor Axsys Systems, which is set to be acquired by General Dynamics (NYSE: GD), leading some to believe that FLIR could be next. In CAPS, nearly 97% of the 782 members rating FLIR Systems expect it to beat the broader market.
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