Having answered a related question, Automatically highlighting nominalizations (a.k.a. zombie nouns) as a writing aid, I realized the listofitems could also perform this task rather simply.
UPDATE for handling capitalization and punctuation.
The item list is parsed on three levels: first by designated key words, then by spaces, and finally by designated punctuation. We loop through the list arising from the 1st level of parsing. Text between the key words is output in the raw (see \x in the \colorize macro). Then, each keyword that is parsed has to be analyzed: the \if\relax\thewords[,,]\relax tests determine if the keyword is surrounded by either a space or any designated punctuation to the left and right sides. If so, the keyword is output in colorized form. However if not, it means the keyword was part of a larger word (like "boo" inside of "TeXbook") and is thus excluded from colorization.
The key for building the parse list and designating the colors is the \setcolor{<word>}{<color>} macro. For a word like foo, It creates a macro \foocolor that will hold the designated color for foo. Also, if foo is the first word designated it appends the parselist with foo, otherwise it appends the parselist with ||foo. It also repeats the process for the capitalized version of the word. This means, for this example, the final \theparselist becomes {foo||Foo||bar||Bar||baz||Baz||biz||Biz} which is the listofitems syntax for parsing any of those 4 words on the 1st level.
\documentclass{article}\usepackage{listofitems,xcolor}\newcounter{colorwords}\newcommand\colorize[1]{% \expandafter\setsepchar\expandafter{\theparselist/ /,||.||!||?||;||:||-}% \reademptyitems% \greadlist\thewords{#1}% \foreachitem\x\in\thewords[]{% \x% \ifnum\xcnt<\listlen\thewords[]\relax% \if\relax\thewords[\xcnt,-1,-1]\relax% \if\relax\thewords[\the\numexpr\xcnt+1,1,1]\relax% \textcolor{\csname\thewordssep[\xcnt]color\endcsname}{\thewordssep[\xcnt]}% \else% \thewordssep[\xcnt]% \fi% \else% \thewordssep[\xcnt]% \fi% \fi% }%}\def\theparselist{}\makeatletter\newcommand\setcolor[2]{% \stepcounter{colorwords}% \ifnum\value{colorwords}=1\g@addto@macro\theparselist{#1}\else% \g@addto@macro\theparselist{||#1}\fi \expandafter\def\csname#1color\endcsname{#2}% \edef\thestring{\Capitalize#1\relax}% \g@addto@macro\theparselist{||} \expandafter\g@addto@macro\expandafter\theparselist\expandafter{\thestring} \expandafter\def\csname\thestring color\endcsname{#2}%}\makeatother\def\Capitalize#1#2\relax{% \ifcase\numexpr`#1-`a\relax A\or B\or C\or D\or E\or F\or G\or H\or I\or J\or K\or L\or M\or N\or O\or P\or Q\or R\or S\or T\or U\or V\or W\or X\or Y\or Z\else #1\fi#2%}\begin{document}\setcolor{foo}{red}\setcolor{bar}{blue!70}\setcolor{baz}{cyan}\setcolor{biz}{green!70!black}\colorize{Lorem ipsum dolor foo sit amet bar: consectetuer adipiscing elit baz! Ut purus elit,vestibulum ut, placerat ac, adipiscing vitae, felis. Baz curabitur baz dictum gravidamauris. Nam biz arcu libero, nonummy eget, consectetuer id, vulputate a, bar magna.Donec vehicula augue eu neque. foox xfoo ,foo foo, foo. xfoox meta -foo meta-foofoo-bar.}\end{document}
An expanded version of this answer, to handle searches for intra-word phrases, in addition to the "whole-word" phrases of this answer, can be found here: Change color of all occurences of particular character in entire document.