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 companies can help you establish a winning portfolio.
Stalking the monster
To find tomorrow's winners, we've enlisted the help of more than 180,000 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.
Recent Stock Pick
|CNBL||98.30||OYO Geospace||216.18||Primo Water (Nasdaq: PRMW )||*****|
|BillKaufman||95.38||Intuitive Surgical||257.20||SeaDrill (Nasdaq: SDRL )||*****|
|ahknatan||99.12||Technology Bull 3X||233.75||Sirius XM Radio (Nasdaq: SIRI )||***|
Score = 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.
Hiding in plain sight
SodaStream International (Nasdaq: SODA ) lost its fizz after Primo Water was touted as a threat to its make-it-yourself-soda revenue stream. My Foolish colleague Rick Munarriz thinks the market needs to filter the peril through a different lens, since grocery stores are beholden to Coca-Cola, PepsiCo (NYSE: PEP ) , and other beverage distributors that won't like any competition taking up shelf space.
While that's true, it's not like Cott and RC Cola don't already have shelf space, and Wal-Mart and Lowe's aren't captive retailers to anyone. Primo already has water distribution deals in place with them, and adding another potential revenue maker will be a welcome addition.
Now Primo might have lower margins on its OmniFrio unit, particularly with Wal-Mart, but the lower unit price will be an attractive selling point. Although I remain unconvinced about its long-term investment attractiveness, I think it can make a big dent in SodaStream's business.
CAPS member dinosaurworld expresses some of the doubts I hold about Primo's business model.
Half of book value is goodwill, and they're competing with a product that is free and readily available in your home. How many people want to lug their containers back and forth from the store. There are companies that deliver bottled water after all, and most people who wanted purified water get a Brita. Bottled water works because it's convenient. This offers none of the benefits of its competitors and many more costs
A long time coming
Despite the temporary resolution of the financial crisis in Europe, the outlook and fundamentals for the oil and gas industry remain attractive. Historically high oil prices, increased growth in oil and gas demand, greater spending on exploration and development activities and ongoing political instability in the Middle East and North Africa means the pieces are in place for offshore-drilling contractors SeaDrill, Noble, and Transocean (NYSE: RIG ) to continue moving higher.
SeaDrill is up 38% off recent lows (when analysts downgraded the stock based on valuation), as are its peers. In comparison to Noble, though, SeaDrill trades at just a quarter of the multiple the market assigns to its rival.
CAPS member D0min0 says we haven't reached the end of our rope yet for oil dependence, which means SeaDrill has a long life ahead of it.
Ocean drilling is the only future path to feed our oil addiction. We won't give it up until it falls off a cliff, maybe in 30 years or so. In the meantime, SDRL will be a major player in the field.
Add SeaDrill to your watchlist and let us know in the comments section below how long you think its lifeline is.
A rocket higher?
It's been a while since satellite radio pioneer Sirius XM Radio seemed on the verge of oblivion, and Standard & Poor's recently acknowledged it was moving farther away from the precipice by raising its credit rating one notch, saying credit quality looked more sustainable every day.
That's not saying it's out of the woods, of course, because the auto industry remains on wobbly legs and Sirius relies on new-car sales for growth. New-car dealer Group 1 Automotive (NYSE: GPI ) recently reported higher profits, but that was due only to higher prices. It actually sold 2.3% fewer cars than a year ago. Still, some industry analysts are looking for the seasonally adjusted annual rate of sales to hit its highest level since 2009. Sales are up nearly 10% in October, though they're down ever so slightly from September.
CAPS member The1MAGE says Sirius, without the overhang anymore, will be able to realize its true price level, which will be significantly higher than where it sits now.
This stock is finally getting out from under an agreement to hold down their prices, so I see income climbing. They are expanding content, and they have made a deal to place their radio service into the new Suburu line. This is just another in a line of new cars where this product is available.
It is knocked down right now, but I see it coming back. But with Internet radio on the rise, I am not sure it would be a good hold for longer then 2 to 3 years. More if they get smart and start an Internet version of their service.
With 82% of the CAPS members rating Sirius to beat Wall Street's expectations, they seem tuned in to the prospects for growth, but the low, two-star rating they've assigned it suggests they still think there are better places for your money.