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 125,000 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.

Player

CAPS Member Rating

Monster Stock

CAPS Score

Recent Stock Pick

CAPS Rating
(5 stars max)

tenmiles

100.00

Emergent BioSolutions

371

State Street (NYSE: STT  )

**

pokeytax

99.96

Pacholder High Yield Fund

95

Target (NYSE: TGT  )

***

mikwilly

99.94

Graham

251

Mosaic (NYSE: MOS  )

****

MLGtrader

99.92

Ambac Financial

337

UltraShort Real Estate ProShares (NYSE: SRS  )

***

b15184

99.88

Fairfax Financial

107

Goldcorp (NYSE: GG  )

***

CAPS score = how many points the pick is beating the S&P 500 since 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, stocks to sell. Just consider them starting points for your own further research of potential extreme buying opportunities.

In search of Bigfoot
The waning days of 2008 were a period of cataclysmic change in the U.S. commercial real estate market. According to a report by the MIT Center for Real Estate, prices of commercial real estate sold by major institutional investors fell by almost 11% nationwide in the fourth quarter, and by 15% for all of last year. 

The Dow Jones U.S. Real Estate Index, which charts the performance of real estate investment trusts (REITs), did even worse, dropping 40% in the fourth quarter. The index reflects trends in leasing rates for commercial property, as well as valuations arising from development costs, vacancies, and transaction values.

The MIT index, which is somewhat different from the Dow Jones index, suggests that commercial values held up better than the market as a whole did. So if you think real estate will lead the recovery, it might be time to start investigating some of the components.

However, if you think the balancing act that General Growth Properties (NYSE: GGP  ) is performing on the brink of bankruptcy is only a sign of more trouble to come, or that mall operator Simon Property Group (NYSE: SPG  ) will suffer a real crisis as retail stores close, the UltraShort Real Estate ProShares exchange-traded fund might be the way to go. It seeks to double the inverse of the daily performance of the Dow Jones U.S. Real Estate Index. In short, if the real estate index falls another 10%, the ETF seeks to be up 20%.

And there's probably a good case to be built that office buildings, shopping malls, and industrial sites have not yet hit bottom. Despite the brief rally that the retail sector saw in January -- sales rose 1% for the month -- it's likely that consumer spending is going to remain constrained for the foreseeable future.

Moreover, a string of retailers like Circuit City, Linens 'n Things, and Sharper Image filed for bankruptcy protection last year. Even those not in danger are reducing their number of stores. An investor could do well by betting that we'll see more malls turn deathly quiet.

Now, these "ultrashort" ETFs aren't the best investment vehicles for all investors because of their volatility. CAPS member hateninja isn't a supporter of such ETFs, but thinks that commercial real estate is going to be the next big catastrophe, and that the UltraShort Real Estate ProShares fund should do well:

I'm not a fan of these ETFs but I live in Phoenix. Am ... seeing the effects first-hand of an economy buying too much stuff it does not need. Amazingly, junk stucco housing at 300-500k a pop was also included in that. Commercial [real estate] is next to take a huge hit, and the [mainstream media] has not been doing a good job reporting all of this.

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.

Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.  


Read/Post Comments (1) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 19, 2009, at 1:01 AM, treadlightly wrote:

    Being invested in a variety of real estate properties from North to South Florida as part of my portfolio I have experienced the ever decreasing valued and on-going difficulty in obtaining and/or maintaining tenants for Commercial & Residential properties. Vacancies are at an all time high at this very moment. Businesses in the smaller cities are closing at an astonishing rate, and the owners and employees are moving to larger cities in hope of securing jobs that will provide some form of income for survival. Today, after having done my homework over the past month and a half, I also added a significant position in UltraShort Real Estate ProShares (SRS) ETF due to today's share-price and the ETF's tracking of the Dow Jones U.S. Real Estate Index (which was down 40% in the 4th qtr and also noted above in the article by Rich Duprey).

    Another major factor for buying a high stake in SHORTING the Real Estate Index was, though the MIT Index did seem to show that Commercial Real Estate faired better than the market as a whole during the past qtr, my analysis of the 1st qtr of 2009 statistics of Commercial Real Estate in Florida indicate that Commercial Real Estate is visibly affected by the extremely high increase in failing businesses and retail stores. The Domino Effect is, in turn, creating countless VACANCIES at business sites and retail stores from one end of the continent to the other. These Commercial vacancies are at an all-time high (and the vacancies are expected to continue growing month after month just as the housing market's foreclosures grew over the past couple years. Lastly, many of the gains to be bagged in today's ETF market are to be found in buying Ultra Short ETF's, which are leveraged 2 times the index. Being on the sidelines, is to but miss the opportunity for the greatest gains and potential double-baggers, as will be the case with SRS in each of the days ahead. I'm anticipating my decision to SHORT the Real Estate Index with the purchase today of SRS to be my next double-bagger. My last double-bagger was with the SHORTING of the Financial Index with the purchase of SKF (Ultra SHORT Financial ProShares). I continue to be short on the Financials index as well.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 833754, ~/Articles/ArticleHandler.aspx, 11/26/2014 3:37:05 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement