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 165,000 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 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
It's been almost exactly six years since Fool co-founder Tom Gardner first recommended Buffalo Wild Wings to subscribers of Motley Fool Hidden Gems. At the time I didn't understand the attraction behind a chicken wings-and-beer joint. Along with fellow guest analyst Tom Engle, I recommended for the small cap service FormFactor (Nasdaq: FORM ) , a semiconductor wafer test company with a disruptive technology that seemed to have a better growth trajectory than a Hooters bar without the, um, ambiance.
Well, here we are six years later and B-Dubs has nearly tripled in value while FormFactor is trailing a battered market by 41 percentage points -- and apparently I'm still at odds with what the market sees in the wing slinger. After a disappointing first quarter earnings report in April, Buffalo Wild Wings got hammered. While its stock has continued to fall, I'm licking my chops at the prospects for a company that "disappointed" analysts by reporting 24.5% growth in earnings on a 15.7% increase in revenues, despite comps remaining flat.
Highly rated CAPS All-Star REIN agrees saying one of the factors is a cyclical swing in chicken prices.
Chicken wing prices are usually cyclical and at record highs right now. Prices could be a sign of competition? But [Buffalo Wild Wings] will be there to reap the rewards when prices return to normal and those profits will drive the stock high again.
When you compare B-Dubs valuation in relation to its growth prospects, it's much more attractive than YUM! Brands (NYSE: YUM ) or Brinker International (NYSE: EAT ) , indicating that relatively more earnings growth is expected than at the two competitors.
Making the connection
It's even looking better than McDonald's, which has been pouring on the growth with a 4.8% increase in May same store sales. European sales alone were 5.7% higher, but look for the weak euro to still take a bite out of earnings. Europe accounts for about one quarter of the burgermeister's operating income.
What diners have been lovin' about McDonald's is the continued value its meals represent. CAPS All-Star edwjm says they made the chain a consistent performer, but BACnumber1 thinks the obesity police of our nanny state will hamper further growth.
In an era where the FDA is trying hard to eliminate fast food, Supersize me came out, and slowly, at least in CA, less people appear fat. Of course, considering that I life in California, SF to be exact, I don't know much about the width of other Americans. However, clearly, McDonalds the rest of the fast food industry are doomed.
A shining example
If we're going to be forced to make healthier lifestyle choices, then perhaps Jamba will be a beneficiary. Its smoothie business would seem ready-made to tap into that trend, but it's been stuck in a turnaround situation that has been dragging operations down.
Last year it announced its intention to refranchise as many as 150 stores, but that caused it to post a wider than expected loss last quarter as there were fewer company-owned restaurants. To help expand its brand, Jamba is introducing its smoothies into supermarkets, which is reminiscent of Jones Soda (Nasdaq: JSDA ) recent win in gaining shelf space at Wal-Mart Stores. It's an opportunity to have your brand in front of a lot more faces.
Yet SaxMD says the hype over the smoothie-as-health shake had its 15 minutes of fame and Jamba is likely to be a much smaller company in the future.
Jamba Juice has run its course as research shows that juices are not the healthy panacea that was once thought. I believe sales will continue to decline and the company will have to contract. Although their business plan and original premise were promising, juice will not be as popular in the future as it has been.
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.
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