Tomorrow's Monster Stocks

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 120,000 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, sell. Just consider them starting points for further research of what could be extreme buying opportunities.

In search of Bigfoot
Some of the big news in computer sales has been the mammoth growth that Apple (NASDAQ:AAPL) has experienced, maintaining its third-place spot in U.S. sales but seeing a surge in market share to just shy of 10%. Dell, on the other hand, still reigns superior, maintaining its top rank while boosting market share. While it sometimes feels like the computer maker is being written off, Dell continues to own nearly a third of the market domestically (and almost 14% worldwide). At its current price, Dell looks cheap. It trades for one-third of the valuation of Apple or Hewlett-Packard (NYSE:HPQ), selling at a price-to-earnings ratio (P/E) less than 10.

Yet CAPS member TheHuney smartly points to Dell's increasing indebtedness in a commoditized industry as just one reason the computer maker will underperform the market:

Surely I can't be the only one who notices that Dell's book value is $1.41 and they are selling at over $15.... Debt-to-value is kind of ugly.... I'm assuming that's a deliberate strategy on Dell's part, but I question why on Earth you would want that much leverage in a commoditized industry. Free cash flows for the most recent fiscal year were about $0.97 per share. For FY '06, FCFs were $2.19 and for FY '05, they were $3.63. However, both the previous two years look deceptively high because they sold off a lot of investments.

Scanning the depths for Loch Ness
Like airlines that sought to protect themselves against rising oil prices only to find their hedging strategies had sandbagged their earnings when prices fell, VeraSun Energy is an ethanol producer that got caught buying corn at $7 a bushel only to find the price cut in half. Some hope that a USDA loan program will help offset those high-cost inventories. Asset management firm Invesco swept in recently to purchase almost 16 million shares of VeraSun, but CAPS member tixareforkids isn't smiling. "I don't know where they can run to over the long term - this model just won't work in spite of the Invesco purchase."

A chance for scary growth
It takes more than a few All-Star picks and a quick paragraph to make buy or sell decisions, so start your own research on these stocks on Motley Fool CAPS. You can 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. And while you're there, weigh in with your own thoughts on whether you think these are tomorrow's monster stocks.