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The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage. The opinions expressed are those of the author and do not represent the views of TheStreet or its management.

NEW YORK (

TheStreet

) - Growth stocks have been rallying. During the past year, large growth funds returned 27.6%, outdoing large value by 4 percentage points, according to Morningstar.

Can growth stay in the lead? Yes, says Nick Calamos, portfolio manager of

Calamos Growth

(CVGRX) - Get Calamos Growth Fund A Report

. He says that growth stocks are still undervalued.

The views of Calamos are worth considering. Along with his uncle John Calamos, he has run Calamos Growth since 1990, and the pair have produced a sterling record. During the past 15 years, the fund has returned 15.3% annually, ranking as the top large growth fund. The second place finisher is

Vanguard Capital Opportunity

(VHCOX) - Get Vanguard Capital Opportunity Inv Report

, which returned 12.5%, while the

S&P 500

returned 6.8%.

The Calamos managers built their record by focusing on companies with strong earnings growth and solid balance sheets. Conditions for such stocks are now compelling, says Nick Calamos.

By definition growth stocks always cost quite a bit more than value names. But the growth premium is now about as small as it has been in two decades, Calamos says.

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The premium reached a peak in 1999 when the price-earnings ratio of growth stocks was three times the figure for value stocks. Then the Internet stocks collapsed, and growth stocks declined. During the decade that began in 2000, large growth funds about broke even while large value returned 3.1% annually. As a result the growth premium narrowed.

Now the P/E multiple of the Russell 1000 Growth Index is 17.9, about 22% greater than the figure for the Russell 1000 Value Index. "People got burned when the technology bubble burst, and they have not been willing to pay up for growth," says Calamos.

Markets move in cycles, says Calamos. Growth stocks lead for a period of years, and then value names move ahead. Growth recently returned to the front, and it is likely to stay there for a long time because of the boom in emerging markets, says Calamos.

With millions of consumers entering the middle class in the emerging economies, demand is growing for a wide range of goods and services. Because of their multinational operations, big growth stocks will be prime beneficiaries of the trend. Powered by global sales, stocks overall should return 5% to 7% annually for the next decade, and growth stocks should do 50% better, says Calamos.

To spot winners, he looks for companies with high revenue growth that can be sustained for years. Calamos particularly likes companies with relatively little debt and high returns on equity. He is willing to pay high prices for premium businesses, and the fund has a price-earnings ratio of 18.5. But Calamos steers away from the most expensive names.

While his strategy works most of the time, it can be volatile. The fund crashed in 2008 before soaring the next year. To use the Calamos fund effectively, shareholders must be prepared to buy and hold through up and down markets.

These days the fund is emphasizing stocks that can benefit from the boom in infrastructure spending in the emerging markets. A favorite holding is

United Technologies

(UTX) - Get United Technologies Corporation Report

, which makes aircraft engines, Otis elevators, and power generating systems. The company maintained a high return on capital throughout the recession. "This is a high-quality way to play global growth," says Calamos. "The stock can grow 11% annually for the next three to five years. That will be a decent showing in a market of single-digit returns."

Calamos overweights energy stocks because he figures that growing global demand will continue pushing up oil prices. A holding is

Helmerich & Payne

(HP) - Get Helmerich & Payne, Inc. (HP) Report

, which provides drilling rigs for oil and gas companies in the U.S. and abroad. The company's return on capital should increase as drilling activity grows in the next several years.

Another holding is

Amazon

(AMZN) - Get Amazon.com, Inc. Report

. Revenues are growing at a 36% annual rate. Sales should continue climbing at the company expands into cloud-computing and increases its global business.

Stan Luxenberg is a freelance writer specializing in mutual funds and investing. He was executive editor of Individual Investor magazine.