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 170,000 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 by 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 chances of AK Steel generating monster returns is a decidedly contrarian play these days. Iron ore prices are rising and are expected to soar next year, with AK suggesting they could go some 65% higher from their current levels. For every 5% increase in prices, the steel maker says its earnings will take an $11 million hit.

Arcelor Mittal (NYSE: MT), as the world's largest steel company, can't escape rising costs either, but it was still able to produce a profit last quarter where AK Steel suffered a loss. To try to mitigate the impact, AK has instituted a series of price increases across its portfolio of products, raising the base price for new orders of hot-rolled products by $30 per ton and cold-rolled and all-coated products by $40 per ton.

Steel was one set of commodities that rose in the latest ISM Manufacturing index report issued last week, and so long as China continues to use an outsized proportion of production, it should see prices elevated. While inputs to the process will swipe some of the momentum, steel industry output should offset some of that.

Investors like CAPS member billybob4148 think with the steel industry having been beaten down based on slow-growth guidance, it provides an excellent entry point to capture future growth and profits. Why not head over to the AK Steel CAPS page and tell us why we shouldn't steel ourselves for further declines.

A good reception
Look at the Navy suddenly being responsible with the taxpayers' money. A few months ago, it got Boeing (NYSE: BA) to build a couple of squadron's worth of F-18 fighter jets below cost, and now it got General Dynamics and Lockheed Martin (NYSE: LMT) to agree to do the same with a bunch of new shallow water boats.

The Navy is getting more boats for less money than originally planned, and the defense contractors are keeping the money rolling in. It's likely their margins will take a hit as a result of bidding so low, but it's not like they're not going to be making anything on the contract.

Like AK Steel, xjp83x says General Dynamics is a contrarian play on the limited defense budget sector:

I like [General Dynamics] as a counter intuitive play. Defense spending is too importance to the US, in its bid for resource accumulation. Fundamentally this one stacks up too. Again I use consistent elevated ROE, minimal debt, decreasing number of shares, lots of free cash flow etc.

Only you can sound out whether a defense contractor like GD is right for your portfolio. Add it your My Watchlist page and have all the Foolish news and analysis about the stock aggregated for you in one place.

Inflating values
Seems like we have a number of contrarian numbers today. In addition to higher steel prices, a shortage of electronic components also constrained the ISM's manufacturing report. When the industry researchers at iSuppli suggested back in August that a major supplier of chip-making equipment may have difficulty meeting demand, shares of Micron and Intel (Nasdaq: INTC) fell.

Yet the higher prices Micron would realize from a shortage would undoubtedly benefit its bottom line and be a welcome reprieve from the glut the industry has suffered under the past few years. Micron's DRAM memory chips are the primary component of computer memory. Forecasts of slower PC growth didn't help either, but that looks to be a thing of the past. Despite all the fretting, PC sales grew 7% sequentially and over 10% year over year in the third quarter.

CAPS member Skyshark29 seemed to have an inkling to as much happening when he said the tech sector was only just getting ready to roll:

Tech sector just ramping up. The memory and storage sectors have room to grow with cloud computing advancing and more data centers are getting upgraded. Solid state drives are also entering the consumer market (retailers) with increasing strength.

Join him on the Micron CAPS page and let us know if it will continue to chip away at conventional wisdom.

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.