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 by taking advantage of the market's weaknesses. These aren't penny stocks. They're viable companies with sound business prospects, they've posted some phenomenal returns, and they're all small, obscure, and ignored. 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've enlisted the help of more than 135,000 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 your own further research of extreme buying opportunities.
In search of Bigfoot
With the economy still weak, it stands to reason that industrial activity -- and, hence, demand for coal -- will be at depressed levels. The 23 companies in the CAPS Coal sector, for example, have been hit hard by the recession, and shares have fallen by almost 40% on average.
China has imported 72% more coal over the first five months of this year than it did in the same period last year, but don't expect that kind of performance to show up in the coal producers' earnings reports anytime soon. Peabody Energy (NYSE: BTU ) , for example, is considered a bellwether company for the industry, and its austere second-quarter report was matched only by its dour production guidance. Peabody spinoff Patriot Coal reports earnings tomorrow, and the domestically focused coal producer might face tough going, too.
Although thinking Patriot Coal will outperform the market, CAPS member weiteck is making a short-term call, particularly in light of the poor prospects for the industry in the current political climate.
No liquidity risk but BTU spinning PCX out would mean that PCX's long term prospects are not as good. Most of [its] coal mines are located in [the] Central Appalachian. Higher costs of mining in these tough regions. Its coal are of poor thermal quality with 2/3 noncompliant coal. This is certainly not a good sign at least during Obama administration. About 20% of its revenue is from metallurgical coal. The use of such coal in [the] US steel industry for furnace coke is declining because of better technology. This is not a good sign for PCX. They may have to sell more to [the] overseas steel industry.
Meanwhile, the poor prospects for the back-to-school season leave teen retailers facing the possibility of being an industry not sprouting any shoots, green or otherwise. Yet not every retailer is running threadbare. Aeropostale has been a fairly consistent performer, and when most of its rivals found their same-store sales a soggy mess in a rain-soaked June, it still posted strong numbers.
Highly rated CAPS All-Star member killtheump thinks Aeropostale has found success because it's figured out how to exploit the consumer's desire for trendy but cheap duds.
My wife's preferred retailer to our teenage girls. They have [benefited] greatly from [consumer] price consciousness, while … keeping a brand image that remains cool among teens. They're doing a great job of managing the business, [growing] slowly while maintaining cash and no debt. While it may not have the dividend many of its competitors offer, the price appreciation over the last couple years has more than made up for it -- trouncing the S&P by 70 points over that time. I'm sticking with it. The only thing that remains a mystery to me is its 2-star rating in CAPS. Many of you are missing the boat on Aeropostale.
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.
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