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I searched for very profitable stocks with strong growth prospects. These stocks would have to show stable financial conditions and generate significant free cash flow. However, in order to find the proper moment to open a position, a technical analysis with a momentum indicator can be of great assistance for investors.

I have elaborated a screening method, which shows stock candidates following these lines. Nonetheless, the screening method should only serve as a basis for further research.

The screen's formula requires all stocks to comply with all following demands:

1. The stock is included in the Russell 3000 index. Russell Investment explanation:

The Russell 3000 Index measures the performance of the largest 3000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Russell 3000 Index is constructed to provide a comprehensive, unbiased, and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected.

2. Earnings growth estimates for the next 5 years (per annum) is greater than 15%.

3. Price to free cash flow is less than 14, (many investors prefer using free cash flow instead of net income to measure a company's financial performance, because free cash flow is more difficult to manipulate. Free cash flow is the operating cash flow minus capital expenditure).

4. Long-term debt to equity is less than 0.50.

5. The 10-day moving average is above 20-day moving average, and the crossover happened 2 days or less prior to the start of the screen (Short term momentum indicator).

I used Portfolio123's powerful free screener to perform the search. After running this screen on November 15, 2012, before the market open, I obtained as results the 6 following stocks:

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Data: finviz.com

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Cray Inc. (NASDAQ:CRAY)

Cray Inc. develops, manufactures, markets, and services high-performance computing (HPC) systems, known as supercomputers.

Cray Inc. has no debt at all and it has a very low trailing P/E of 2.76 and the PEG ratio is also very low at 0.14. The price to free cash flow for the trailing 12 months is very low at 11.60 and the average annual earnings growth estimates for the next 5 years is very high at 20%. On November 09, Cray reported its 3Q financial results. Cray beat expectations on revenue and on EPS. Compared with the prior-year quarter, revenue dropped slightly and GAAP loss per share dropped, margins expanded across the board. All these factors make the stock quite attractive.

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Chart: finviz.com

Korn/Ferry International (NYSE:KFY)

Korn/Ferry International provides talent management solutions that help its clients to attract, engage, develop and retain their talent.

Korn/Ferry International has no debt at all and it has a low trailing P/E of 13.27 and a low forward P/E of 12.50, the PEG ratio is very low at 0.88. The price to free cash flow for the trailing 12 months is very low at 10.68 and the average annual earnings growth estimates for the next 5 years is quite high at 15.08%. The company is trading 26.4% below its 52-week high and has 17% upside potential based on the consensus mean target price of $16.10. The very low multiples make the KFY stock quite attractive.

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Chart: finviz.com

Perficient Inc. (NASDAQ:PRFT)

Perficient, Inc. provides information technology consulting services to various enterprise companies primarily in the United States.

Perficient has a very low debt (total debt to equity is only 0.05) and it has a very low at forward P/E of 10.27 and a PEG ratio of 1.30. The price to free cash flow for the trailing 12 months is very low at 11.28 and the average annual earnings growth estimate for the next five years is quite high at 17.50%. The company is trading 21.1% below its 52-week high, and has 43% upside potential based on the consensus mean target price of $15.25. Analysts recommend the stock; among the four analysts covering the stock, three rate it as a strong buy and one rates it as a buy. All these factors make the stock quite attractive.

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Chart: finviz.com

PAREXEL International Corporation (NASDAQ:PRXL)

PAREXEL International Corporation is a biopharmaceutical services company, it provides clinical research, medical communications, consulting, commercialization, and advanced technology products and services to the pharmaceutical, biotechnology, and medical device industries worldwide.

PAREXEL International has a low debt (total debt to equity is 0.47), the forward P/E is 16.78 and the PEG ratio is 1.66. The price to free cash flow for the trailing 12 months is very low at 12.20 and the average annual earnings growth estimate for the next five years is quite high at 16.19%. On October 30, PAREXEL reported its 1Q fiscal 2013 financial results. On that occasion, the company said that net new business wins were $481.1 million and the net book-to-bill ratio was 1.22. During the first quarter, the company purchased approximately 1.49 million shares of its common stock for approximately $54.8 million under its previously announced $200 million Share Repurchase Program, which was implemented in September 2012. The PRXL stock looks quite attractive.

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Chart: finviz.com

Renewable Energy Group, Inc. (NASDAQ:REGI)

Renewable Energy Group, Inc. produces and markets biodiesel primarily in the United States and Canada.

Renewable Energy Group has a very low debt (total debt to equity is only 0.21) and it has a very low trailing P/E of 2.06 and an extremely low PEG ratio of 0.14. The price to free cash flow for the trailing 12 months is very low at 3.15 and the price-to-book value is also very low at 0.36. The average annual earnings growth for the past five years has been very high at 70.90% and the average annual earnings growth estimate for the next five years is quite high at 15%. The company is trading 51.7% below its 52-week high, and has 48% upside potential based on the consensus mean target price of $7.63. All these factors make the stock quite attractive.

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Chart: finviz.com

Smith & Wesson Holding Corporation (NASDAQ:SWHC)

Smith & Wesson Holding Corporation provides products and services for safety, security, protection, and sports in the United States and internationally.

Smith & Wesson has a low debt (total debt to equity is 0.34) and it has a very low at forward P/E of 10.97 and a very low PEG ratio of 0.68. The price to free cash flow for the trailing 12 months is very low at 13.73 the average annual earnings growth estimate for the next five years is very high at 22%. The company is trading 13.2% below its 52-week high, and has 33% upside potential based on the consensus mean target price of $13.00. Analysts recommend the stock; among the six analysts covering the stock, two rate it as a strong buy, three rate it as a buy and only one rates it as a hold. The SWHC stock looks quite attractive.

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Chart: finviz.com

Source: 6 Growth Stocks With Positive Momentum And Low Debt