Stocks that climb to 10 times their original price are a rare breed . But they're not impossible to find -- especially when you have Fools for friends.
The market's best stocks include companies that have risen dozens of times in value over the past decade. These aren't penny stocks; they're viable companies that have sound business prospects and achieve phenomenal returns every year. Finding just one or two of these monstrously successful companies can help you establish a winning portfolio.
Stalking the monster
To find tomorrow's winners, we'll enlist the 115,000 participants at Motley Fool CAPS. We've compiled a list of the most successful CAPS members, dubbed All-Stars, whose picks have doubled, tripled, or even quadrupled in price. Then we've plucked out some of their recent picks for stocks they find equally promising.
Source: Motley Fool CAPS. Score is by how many percentage points a pick is beating the S&P 500 index from the time of the pick.
Of course, this is not a list of stocks to buy -- or, for those monster stocks that our CAPS All-Stars have already found, to sell. Just consider them starting points for further research of extreme buying opportunities.
In search of Bigfoot
Despite the apparent setback Elan and Biogen Idec (Nasdaq: BIIB) suffered a few weeks ago over their multiple sclerosis treatment Tysabri, the biotech is continuing with its plans to sell off its drug-delivery unit, which has attracted private-equity interest and may fetch as much as $1.4 billion. CAPS All-Star member 12bagger, who realized that the market was overreacting to the FDA's pronouncement, is reaping the rewards and believes Elan still has far to go.
The consequence, in my view, was a fantastic buying opportunity akin to [Elan's] crater in 2005 after the FDA temporarily withdrew Tysabri from the market. For all the gravity of its rare but apparently lethal side effects, Tysabri is currently the most effective treatment for the most severe cases of MS. Balancing the known risks against the very significant benefits of Tysabri for the appropriate patients, there seems little doubt that it will continue to be used.
Meanwhile, commodity prices have been pulling back after a huge, sustained surge. Although analysts aren't exactly pessimistic -- prices for many commodities are still at record highs, after all -- some metals get special attention as being able to retain their luster. Copper, for example, can probably still count on China for keeping its long-term demand high. Accounting for a quarter of all global consumption, China has become the world's largest user of the base metal.
Seeing that emerging economies still need the metal, All-Star CAPS member hazelnut283 finds Southern Copper an attractive buy at current prices: "With the incredible increase in value for copper and other minerals, I know this is the time to get in this stock. Everything seems to be lining up: the price is right (near the 52-week low of a little more than $22), the countries [Southern Copper] mines in are up-and-coming economies (MX and Peru) and best of all, it [pays] dividends!!"
And finally, financing troubles mean that Cadence Design Systems won't be able to pursue its bid to acquire rival Mentor Graphics (Nasdaq: MENT) and boost its market position. Yet the software maker for semiconductor chips still was able to achieve its earnings goals, even though the path wasn't easy. It was perhaps the appearance of having two left feet that soured CAPS All-Star member PhillyDan against the company back in June:
Cadence is one of those companies that can't get out of [its] own way. Their bid for Mentor Graphics was clumsy and ill-timed plus they offered too little to appeal to MG [shareholders]. Magma is a much stronger up and coming player in the ASIC arena. Cadence wanted Mentor Graphics for their Electronic Board Level design tools that are far better than what Cadence [offers. Therefore,] they should have offered at least 3 to 5 dollars more to buy MG. Cadence's stock price will continue to muddle along and will underperform the S&P 500 in the next two years.
A chance for scary growth
It pays to start your research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page. Then weigh in with your own thoughts. Let's hear whether you think these are tomorrow's monster stocks that have been uncovered today.
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