Winning stocks with impressive long-term returns can do more than tantalize investors. They might also guide us to the next great stock. For example, BlackBerry maker Research In Motion (Nasdaq: RIMM ) has enjoyed a more than 3,900% hike in its shares in the past five years. And while debate still rages over whether Research In Motion (RIM) can continue to beat the market in the future, it could lead investors to other, similarly promising stocks today -- provided we know where to look.
Finding the tail on this coat
While many doubt the sustainability of its products and service in the face of capable rivals such as Motorola (NYSE: MOT ) and Nokia (NYSE: NOK ) , RIM has continued to plough ahead in the face of adversity. The company settled a patent lawsuit from NTP in March 2006 for $612.5 million, averting a threatened shutdown of service for its popular BlackBerry email devices, and clearing a major risk hanging over the company. RIM already had momentum in selling the popular devices to corporate types, but it's also enjoyed similar success in the consumer sector with its Pearl and Curve handhelds.
If we can nail down some companies profiting from the burgeoning ecosystem that RIM is driving, we might find a hidden treasure worthy of investment. With a giant like RIM, investors typically follow the conventional wisdom, looking only for direct suppliers or partners. Obvious choices include the application providers that target the BlackBerry product line, such as Nuance Communications' (Nasdaq: NUAN ) voice-based search and messaging application. However, investors who stick to these usual suspects risk missing opportunities less directly linked to RIM -- other firms similarly addressing overlooked slices of the communications market, for example.
Motley Fool CAPS can really help us here. The massive Foolish stock database has lots of tools for finding and researching stocks and the people who pick them.
Tagging along with CAPS
With CAPS, investors can look through Research In Motion's tag list for other companies sporting similar attributes. For instance, RIM falls under tags such as "Diversified Communications Services," and "Rule Breakers Universe." In addition, the comments CAPS investors leave regarding rated companies can sometimes lead to similarly attractive investments, even those with little or no direct connection to RIM.
These CAPS resources could lead investors to companies like electronic module designer Comtech Group (Nasdaq: COGO ) . The China-based company sells customized electronic module designs to manufacturers of cell phones, cameras, and a host of other electronic equipment. The company helps customers speed their time to market by integrating designs from component suppliers such as Broadcom and JDS Uniphase (Nasdaq: JDSU ) to perform complex functions. Comtech is proving itself a desirable solution partner; solid growth among key product categories in the most recent quarter sent its sales up 22%. High insider ownership also makes it worth a look for Foolish investors.
CAPS also turns up another interesting Chinese communications equipment provider: the five-star rated Qiao Xing Universal Telephone (Nasdaq: XING ) . Insatiable demand for cellular phones and other communications products across China makes Qiao Xing an attractive play to investors. But Qiao Xing shares have dropped significantly over the last six months as the company struggles through financial restatements. While some investors have soured on the company due to its questionable financial foundation, others see a beaten-down value play, even with the inherent risks of investments in China.
Tail-wagging
Of course, plenty of coattail investments have proved to be mere copycats, ultimately flopping for investors. That's why CAPS is best used as a research tool, not a device to pick stocks for you. Rather than taking anyone else's recommendation, investors should always perform their own due diligence. But you can't beat the information and resources for the price -- namely, 100% free.
Is there another stock you know about that has Research In Motion's wind in its sail? Give your own opinion in Motley Fool CAPS.
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Fool contributor Dave Mock has never worn a coat with tails; he prefers the waiter style. He owns shares of Motorola. Dave is the author of
The Qualcomm Equation. The Fool's disclosure policy is often imitated but never duplicated.
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