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 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.

Note: Score is how many percentage points that pick is beating the S&P 500 by.

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
Offbeat fashion retailer American Apparel more and more looks like it's going to be a monster flop instead of a monster stock. Its mercurial CEO has often taken the company seemingly to the edge of disaster, if not good taste. Where Abercrombie & Fitch (NYSE: ANF) pushed the envelope on what was acceptable, American Apparel seemed to revel in going even further.

Financial shenanigans have also gone hand in hand with the retailer, having to restate its financial statements several times over the years and having its CEO publicly call his CFO "a loser" without credibility in the industry (they've gone through four CFOs already; I wonder why?). American Apparel has also been sued by a former accountant and it just had its independent auditor Deloitte & Touche resign. It reappointed the auditor that was terminated just prior to Deloitte coming on board.

Both have found material weaknesses in its financial reporting, and in resigning, Deloitte went so far as to say it had found out information, that if further investigated, may materially impact the reliability of its previously filed financial statements. Deloitte might not have faith in American Apparel's numbers, but CAPS member roseheathbar has no faith in management, and perhaps worse for a fashionista, says, "Hipster has become cliche."

Burning the midnight oil
Of course, American Apparel isn't the only one with material weaknesses in its financial reporting. China Marine Food also got whacked by not having tighter controls in place, joining a long list of Chinese companies who stand accused of falling short on transparency. Fuqi International (Nasdaq: FUQI) and China Sky One Medical (Nasdaq: CSKI) were singled out, and American Oriental Bioengineering (NYSE: AOB) engaged in what looked like a lot of self-dealing. Investors are right to wonder who they can trust when investing their money in China.

While some accuse China Marine Food of outright fraud, rumymudda thinks it may come down to Western misunderstandings of Chinese culture. Stender89 would probably agree and says it was telling that when the stock plummeted, company insiders bought more shares:

What I found is that on the rather sharp drop in prices the CEO, and several other insiders have increased their holdings substantially. I believe this is the most positive indication of all.

But a very valuable lesson this company is that I MUST know the boundaries of my circle of competence. And this is certainly not within it. I refuse to sell at a loss, because I believe the fundamentals of the business is indeed very rosy, and the outlook is good. 

Getting static
Chinese hog farmer and feed producer AgFeed Industries isn't facing the same kind of financial woes as those companies above; rather, it looks like it's caught between falling hog prices and rising feed prices. That deadly combination is wreaking havoc on AgFeed's customers' ability to pay the bills, causing it to have serious cash flow problems.

Although that may put it between a rock and a hard place, at least it is a situation that won't ruin the company internally. Chinese demand for pork isn't going to abate anytime soon, and getting input costs down can help reverse the decline.

CAPS member G311 likes AgFeed's willingness to go after new opportunities to bolster its operations and regain momentum:

I'm most excited about the fact that China-based AgFeed recently acquired a U.S. hog company, with the main goal of learning from Western technology to improve their wide-ranging China operations. 

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.