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 180,000 monster trackers at Motley Fool CAPS. We've compiled a list of the most successful CAPS members 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
|ryanj1178||98.95||Ford||510.08||Netflix (Nasdaq: NFLX )||**|
|Hibachi0||92.17||Teck Resources||761.51||Research In Motion (Nasdaq: RIMM )||*|
Score based on relative performance versus 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.
Focusing on the future
How the mighty have fallen. Shares of movie rental king Netflix have sagged more than an aging starlet's face without Botox, plunging 75% over the last year after a series of gaffes and miscues by CEO Reed Hastings that make it look like it's heading in the direction of bankrupt Blockbuster. While that's not a likely outcome, the company is facing subscriber losses in its core DVD business and has more streaming competition than it knows what to do with in the likes of Amazon.com, Comcast's Streampix, Hulu, and the joint venture between Verizon and Coinstar (Nasdaq: CSTR ) that combines Redbox and the telecom's Internet video offerings.
While those issues account for its dramatic decline, focusing solely on just those issues ignores what Netflix itself is doing to drive new growth. One outlook is in the rearview mirror, the other out the front windshield.
Netflix has doubled its number of international streaming customers while its domestic customers are growing as well. Many like myself initially severed ties with the movie service after its price hikes, but have sheepishly returned to the fold upon the realization that the breadth and depth of its catalog is what brought us there to begin with. The vast movie library also attracted Apple (Nasdaq: AAPL ) , and subsequently made an ironclad partnership between them.
Fool blogger Maxwell Fisher also points out the nuts-and-bolts stuff Netflix is doing that will make it a better company, including its in-house content delivery network that "will reduce content delivery costs significantly, but the real cost savings won't hit the bottom line until existing CDN contracts mature."
Disconnecting from common sense
As much as I can see Netflix turning itself around, I can't say the same for Research In Motion, if for no other reason than it doesn't have shareholder interests at heart. What other conclusion can be drawn from its decision to grant huge bonuses to former executives?
Yeah, it might have revolutionized the smartphone business with the introduction of the BlackBerry -- the stated reason for RIM's generosity -- but that was a long, long time ago. Apple, Samsung, and just about every other smartphone maker have left the BlackBerry behind. Giving away money now for those musty achievements is simply transferring dwindling shareholder wealth to former insiders.
What's left for RIM and its shareholders is picking through the wreckage and seeing what choice parts it can sell, and it's hired advisors to help it decide whether to put itself on the market, auction off the detritus, or come back and take the market by storm with a new and improved BlackBerry. Don't count on that last one.
Like Nokia (NYSE: NOK ) , which also finds itself getting the short end of the iPhone-Android smartphone stick and has announced its willingness to shed some valuable patents if it can bring in some money to keep it afloat, Research In Motion has been unable to surmount the competition that's risen all around it. The BlackBerry may have created the niche, but it's Apple and more often today Samsung that are defining the market these days.
And like Netflix, RIM has lost nearly three-quarters of its value in the past year, but there seems less hope in it staging a meaningful comeback. It may be best for shareholders if it does sell itself off, as that would allow them to recoup at least some of the value they've lost over the last year and more. Trading for around half its book value and just a fraction of its sales, RIM could see some upside if it stumbled across some good news, but giving away its wealth to former executives indicates that those left running things don't feel much allegiance to its investors.
Add the onetime smartphone icon to your watchlist to keep track of its death throes, then let me know in the comments box below or on the Research In Motion CAPS page the value you'd place on its stock today.
A chance for scary growth
It takes more than a few All-Star picks and a quick pitch to make buy or sell decisions, but Motley Fool co-founder David Gardner has been a Netflix fan for nearly a decade. There's another new rule-breaking multibagger that's getting him excited these days, and you can learn what it is in a free report that you can check out right now. But hurry! It's available only for a limited time.