Stocks climbing to 10 times their original price are rare breeds -- 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 with sound business prospects, achieving phenomenal returns every year. Finding just one or two of these monstrously successful firms can help you establish a winning portfolio.
Stalking the monster
To find tomorrow's winners, we'll enlist the more than 115,000 monster trackers 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.
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 your own further research of extreme buying opportunities.
In search of Bigfoot
It's not surprising to find that mortgage insurers like PMI Group or Radian (NYSE: RDN) are suffering from the rising rate of foreclosures. They cover the banks' losses on mortgages after foreclosure if a borrower goes into default. As the number of defaults rise, their capital positions are coming under pressure. Moody's has already considered downgrading PMI Group, Radian, and MGIC Investment (NYSE: MTG). Yet CAPS member Patrick6k felt as far back as August that PMI is an otherwise well-run company that has been unfairly beaten down:
PMI is so much more than your average insurance company. I particularly like their credit enhancement and mortgage insurance segements. The U.S. Mortgage Insurance Operations segment offers mortgage insurance products in the United States that enable borrowers to buy homes with low down-payment mortgages.
Simply put, this is a well run company in a beaten down sector. The housing market will be fruitful again, and I look for PMI to be one of the survivors.
Solar stocks have also suffered, partly because of fears that oil prices may remain below $100 a barrel, stalling alternative energy initiatives. Yet CAPS member shoreham feels that the long-term demand for solar energy is set, and Suntech Power's current price is highly attractive: "The financial turmoil and the pullback in oil prices has influenced the price of solor stocks. I think that this is a good entry point for something that the world will want in the years to come."
Many CAPS All-Star members earned their scores with DryShips during its huge run-up. Now the drybulk shipper, which has recently ventured into ultra-deepwater drilling, is trading for just a fifth of this past summer's price. CAPS member TheHuney is still in the discovery phase with this company, but figures that even if DryShips blows expectations, it won't sink much more:
Given the fact that this is trading at roughly a 40% discount to its book value right now (at $17), this seems like a good long-term buy-and-hold target. If [DryShips] has a couple of nasty years, you still haven't really lost any value and if they have big earnings, you have the potential to see this stock skyrocket back upwards ... As such, I'm picking outperform and I plan on sitting back and waiting it out.
A chance for scary growth
It takes more than a few All-Star picks and a quick paragraph to make buy or sell decisions. You can start your own 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. While you're there, weigh in with your own thoughts on whether you think these are tomorrow's monster stocks.
In the coming weeks, Fool co-founder David Gardner and his Motley Fool Pro team will invest $1 million in a portfolio designed to help you make money in any market. The service, which just launched, will rely heavily on proprietary CAPS "community intelligence" data to establish long and short positions in a broad range of securities, including common stocks, publicly traded put and call options, and exchange-traded funds (ETFs). To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.
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