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 the more than 165,000 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
The argument in favor of Noble is that it's unfairly being painted with the same brush as BP. Once the furor over the Gulf of Mexico oil disaster dissipates, CAPS member Melonis says, the true value of the driller will shine again: "This one could also be considered as an 'Asset Play' but should simply rebound nicely once the current excitement is over."
For Advanced Micro Devices, it's hard to get around the fact that without several one-time windfalls of cash, the chip maker would still be recording losses. Even in its last release, where it pointed to its upcoming Fusion graphic chips, AMD was still carried forward by a gain associated with reorganization activities. Add in market share losses in desktops and mobile devices to Intel (Nasdaq: INTC ) and we still have a company in trouble.
In trouble, but not done for. There are few catalysts pushing it to gain share, but the new low-cost server processors might just allow AMD to maintain its position. Its Opteron 4100 series could very well resonate with potential customers still cautious about shelling out big bucks for IT needs. Its Fusion chip could build on the success of its previous developments in the graphics market, challenging both Intel and NVIDIA (Nasdaq: NVDA ) .
The chip maker is valued at higher multiples than its rivals, so it's hard to make the argument the stock is a bargain. Yet CAPS member bc0203 is willing to wager that the bets Advanced Micro Devices made will pay off:
AMD has made two big gambles recently, and both seem to be paying off, The first was building a thoroughly modern graphics, scalable chipset architecture with support for all the features that gamers and home theatre PC enthusiasts want; the second was designing a combinatoin CPU/GPU that was powerful and inexpensive, yet energy efficient, positioning them well for low-end PCs and portable devices.
Making the connection
Best Buy is one stock I would be willing to say is a bargain. Sure, last quarter's numbers looked weak, but its first quarter always does, typically accounting for only around 10% of full-year revenue, and it has plenty of time to make it up. Management was confident enough to reiterate its guidance targets, and new initiatives like taking on GameStop (NYSE: GME ) with a used videogame corner generated a lot of buzz. So did its streaming video venture aiming directly at Netflix (Nasdaq: NFLX ) , though I'm not so sure either will be big contributors. Better results will come from its mobile store push, and with only a 22% share of the consumer electronics market, there's plenty of room to grow.
At just 11 times trailing earnings and less than nine times 2011's projected profit, the consumer electronics superstore is trading at valuations basically seen during the worst of the recession we went through. While I am firmly in the camp of those saying we're due for a double dip, Best Buy looks to be a firm choice.
CAPS member mistercube agrees, saying not all business is conducted online and when you get to the need for personal interaction, Best Buy shines:
If you can look beyond the Amazon theory--which suggests anything done historically face-to-face can be done better now over the Internet--then you're left with a valuation story, a company generating a couple billion dollars in annual free cash flow, with well managed debt, strong per-share equity growth, and a dividend that has just about doubled in the past five years (~14% CAGR, with plenty more to grow). That's the kind of story that interests me, rather than speculation about the possible evolution of the shopping experience.
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 and find other opportunities with monster potential.