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, achieving phenomenal returns but happen to share some common traits: They're small, obscure, and ignored. 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 140,000 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.
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
We know that the market is forward-looking, but just how far into the future is it peering for Ariad Pharmaceuticals? The development stage biotech still has a long way to go before being able to market its most advanced cancer treatment, ridaforolimus.
So far, Ariad has been surviving on the basis of collaboration with Merck (NYSE: MRK), and funding its losses through the issuance of securities. Just last month, it issued almost 22 million shares to raise some $35 million. Yet the market is pricing the stock at 30 times the revenue it generated primarily from Merck's milestone payments. Whatever potential there is in its lead drug candidate, and even though the courts will reconsider whether Eli Lilly (NYSE: LLY) infringed on its patents, that's a rich valuation for a company without any drugs on the market.
CAPS member exodus69 believes patience is needed when looking at Ariad's pipeline of potential drugs:
CEO just bought almost 2 million shares, which signals confidence in company going forward. Great pipeline, but requires a little patience since there's no late stage drug trials. Should outperform market as biotech becoming one of the more focused sectors of the investment community.
Dulling the pain
Patience can be a virtue. Investors in BioDelivery Sciences who had the fortitude to wait have been rewarded with the FDA's approval of Onsolis, a pain-management drug for cancer patients. Like Ariad, BioDelivery was relying upon the good graces of its partner Meda for milestone payments and the capital markets for issuing stock. It subsequently received a payout for Onsolis' approval and the drug will launch in the fourth quarter. Analysts anticipate the drug can generate upwards of $250 million annually in revenue, and perhaps much more if it can get off-label approval as well.
CAPS member pick1998 believes that when the market bid up shares on the rumor of approva,l only to sell BioDelivery off afterward, it provided investors with a good, long-term investment:
A good entry into a sound biotech company with a pipeline of unique drug delivery methods. FDA approval of Onsolis with first REMS demonstrated the management's ability to push a drug through the regulatory path successfully. Recent price drop after FDA approval of Onsolis provides the rare entry point into this long term growth biotech stock with minimal risk! Buy whatever you can, and hold for a few years. It is best to put BDSI into your retirement account.
A chance for scary growth
It takes more than a few All-Star picks and a quick paragraph to make buy or sell decisions so start your own research on these stocks on Motley Fool CAPS. You can read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made all from a stock's CAPS page. And while you're there, weigh in with your own thoughts on whether you think these are tomorrow's monster stocks.
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