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 prospects and are achieving phenomenal returns. Finding just one or two of these monstrously successful companies can help you establish a winning portfolio.
Stalking the monster
To try to find tomorrow's winners, we've enlisted the help of more than 140,000 members of 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
Is it a bubble, or is gold's lofty value based on fundamentals? Just because an investment such as the SPDR Gold Trust or iShares Silver Trust is hitting new highs with regularity doesn't mean that it's because of irrational exuberance. There may very well be good reason for the higher price.
One of those reasons could be that the dollar is doomed. Professor and economist Joseph Stiglitz has suggested a scary scenario in which China is moving away from the dollar as the risk-reward scenario of owning dollars becomes more adverse. With Treasuries yielding just about nothing, and countries like China -- which hold large amounts of American debt -- becoming increasingly worried about the value of the greenback, it's likely there will be fewer buyers of U.S. dollars, causing its value to fall.
A weakening dollar likely would send gold higher, while a decline in the greenback as the preferred international currency could yet cause gold to soar. For such reasons, Peter Schiff, president of Euro Pacific Capital, expects gold to hit $5,000 an ounce. CAPS member val1nyc thinks that this dollar volatility means investors will start looking to gold for stability, and that the SPDR Gold Trust, which holds gold, is for them.
There is still a lot of chatter and fear about inflation which is generally advantageous to Precious metals. Furthermore, there has been a slight uptrend in volatility and I expect that trend to continue till Q1 '10, which will lead to more money moving to more stable vehicles such as Gold
A similar case for silver could also be made. It has been bouncing higher for the same reason -- the weaker dollar -- although silver hasn't hit the record highs that gold has. The Fool's commodities guru, Chris Barker, has said silver could be the beneficiary of what he calls the "slingshot effect." As gold bounds higher, silver will also go further, as the ratio of gold prices to silver returns to more historically normal levels. CAPS member Smittyh suggests inflation will be the trigger and the iShares Silver Trust will shine.
Inflation is coming. It will not take a year for the printing of money to catch up with the value of a dollar. Commodities and mining will reap huge profits as the dollar devalues. My favorites are silver, zinc, copper and gold.
I've already voted with real dollars on silver moving higher, and have gone long in CAPS on gold. Join me over on the SPDR Gold Trust CAPS page in rating it an outperform, or let us know -- also in the comments section below -- why you think this investment won't hold up.
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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