Tomorrow's Monster Stock?

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 that are achieving phenomenal returns. 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've enlisted the help of more than 160,000 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.

*Score is how many percentage points that pick is beating the S&P 500.

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
You could say the theme with the three potential monster stocks above is the risks associated with putting all of your eggs in too few baskets. Allos Therapeutics has a lot riding on its drug Folotyn, a treatment for patients with peripheral T-cell lymphoma (PTCL), a rare cancer. It launched the drug in January after receiving fast-track status from the FDA, but now has to perform additional clinical trials to verify the efficacy of the treatment.

With the monthly cost of treatment running north of $30,000, insurers like UnitedHealth Group (NYSE: UNH) have balked at the "unconscionable" price, though admitting they'll have to pay for it because it's the only treatment of PTCL out there. There have been significant increased costs associated with the launch, and Allos recorded a fourth-quarter loss that was worse than what Wall Street expected. It also had to raise funds from a public offering to support the launch. If those required additional clinical trials don't bear out the early results it obtained, the stock could well implode.

CAPS member JPG101 isn't one that's bought into the promise Allos Therapeutics represents, believing it will ultimately not amount to much:

Over 800 million in market cap for a company with a very very expensive drug that isn't even proven to change outcome? And how many patients a year will actually be candidates for this drug? A buyout candidate maybe by really lousy pipeline poor big pharma (Pfizer!) but for 800 million $ there are a lot of better buys out there.

A deep breath
DragonWave is another that will have to convince investors that it can win deployment of its microwave radio frequency networking equipment with big wireless carriers like AT&T (NYSE: T) and Verizon (NYSE: VZ). Analysts have begun discounting the notion it can though, because of its all-outdoor solutions for equipment deployment, and fret that its reliance on Clearwire opens it up to undue risk. Speculation already abounds that it has lost those contracts.

DragonWave's best hope may be in rural area deployments, where concern over erecting towers for its equipment is lower. With all the capital spending carriers have initiated, CAPS member TerryHogan says a contract win or two would be a unpleasant surprise for all those shorting the stock:

Oversold by shorts, which buyback should help deal with. Also, I think earnings will surprise in May, which should give it a nice catalyst. Some banks have an $18.00 target, but I think $11.60 is pretty realistic after earnings come out. It'd be nice to see them announce a new contract for all the capital spending that the US telecoms are doing.

A nice tailwind
That lack of diversity has hurt DragonWire's stock, and Allos investors should look at Medivation to see the potential destruction that awaits them if Folotyn fails. Medivation's Alzheimer's treatment Dimebon failed to live up to expectations in late-stage trials last month, and shares plummeted from $40 a stub down to around $10 each. That was a failure for Pfizer (NYSE: PFE), too, which was licensing the drug from the biotech. Fortunately it still has top treatment Aricept to fall back on, which it markets with Japanese pharmaceutical Eisai.

Medivation isn't a one-trick pony, but Dimebon was its biggest, best hope. Still it will continue working on developing it along with treatments for prostate cancer, and more than 78% of CAPS members think it has a chance of outperforming the broad market averages. You can tell us on the Medivation CAPS page if you agree with their prognosis.

A chance for scary growth
It takes more than a few All-Star picks and a quick pitch to make buy or sell decisions, so start your own research on these stocks on Motley Fool CAPS. If you want additional ideas with monster potential -- ones that have been fully researched and vetted -- check out Motley Fool Stock Advisor for 30 days, risk free.