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Tomorrow's Monster Stocks?

By Rich Duprey - Updated Apr 5, 2017 at 7:53PM

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Discover promising companies singled out by market-beating investors.

Stocks that climb to 10 times their original price are a rare breed -- 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 over the past decade. These aren't penny stocks; they're viable companies with sound business prospects, achieving phenomenal returns every year. 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'll enlist the more than 125,000 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 plucked out some of their recent picks for stocks they find equally promising:

Player

CAPS Member Rating

Monster Stock

CAPS Score

Recent Stock Pick

CAPS Rating (out of 5 max)

tenmiles

99.99

Emergent Biosolutions

356.42

KV Pharmaceutical

***

MLGTrader

99.93

Ambac Financial (NYSE:ABK)

336.80

VASCO Data Security (NASDAQ:VDSI)

*****

foolsMeThrice

99.87

PotashCorp (NYSE:POT)

202.69

Allianz

*****

tuffsledding

99.80

Mechel (NYSE:MTL)

307.18

American Capital (NASDAQ:ACAS)

****

MystixX

99.30

Silver Wheaton (NYSE:SLW)

145.62

Intuitive Surgical (NASDAQ:ISRG)

****

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 into extreme buying opportunities.

In search of Bigfoot
For a business development company to withhold paying a dividend, its situation must be dire, because the company will suffer certain (and stiff) tax consequences. But American Capital faced that situation last month, after mark-to-market accounting forced it to take $698 million in depreciation losses for the quarter. Stuck between retaining its dividend or possibly running afoul of its debt covenants, it took the necessary step of suspending its shareholder payments.

While that was a painful decision for the company (and investors, since the once-healthy dividend was a top reason for holding the stock), it might be a relatively short-lived event. Investments have been performing well, and net operating income has remained strong. More importantly, American Capital is trading below net asset value. With management intent on reinstating the dividend sometime in the near future, it could be an interesting time to stake a claim here.

Earlier this year, CAPS member griderX correctly called American Capital's dividend unsustainable, more recently questioning whether it can survive 2009. 

Meanwhile, khrushchv thinks the situation is difficult, but if asset valuation stabilizes, this CAPS player thinks the portfolio's strong performce could lead to a reinstated dividend and rising shares:

[American Capital], like all RICs/BDCs, is in a tough spot in the current environment. On the one hand, their book value has declined by fairly large amounts (and their stock price has more than followed suit), the dividend has been suspended, and their debt covenants look like they might get triggered. On the other hand, the cash flows on their portfolios look good despite the fact that the market values have become severely impaired (in terms of trading prices), the company is hoarding cash to help stabilize their equity, is picking up ECAS in an all stock deal (which should decrease volatility in their book value), and insiders have been making fairly large open market purchases. This one is a tough call, but their portfolio appears to be performing fairly well...if their asset values stabilize I think [American Capital] will re-instate the dividend (perhaps at a lower level) and the stock price is likely to appreciate dramatically.

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. While you're there, let us know whether you think these are tomorrow's monster stocks.

On Jan. 12, 2009, Fool co-founder David Gardner, Jeff Fischer, and their Motley Fool PRO team will accept new subscribers to their real-money portfolio service. Motley Fool PRO is investing $1 million of the Fool’s own money in long and short positions in a range of securities, including common stocks, put and call options, and exchange-traded funds. They also incorporate proprietary CAPS "community intelligence" data into their research. To learn more about Motley Fool PRO, and to receive a private invitation to join, simply enter your email address in the box below.

American Capital is a Motley Fool Income Investor selection. Intuitive Surgical is a Rule Breakers pick. VASCO Data Security is a Stock Advisor recommendation. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Intuitive Surgical, Inc. Stock Quote
Intuitive Surgical, Inc.
ISRG
$238.37 (1.00%) $2.35
Wheaton Precious Metals Corp. Stock Quote
Wheaton Precious Metals Corp.
WPM
$34.09 (1.31%) $0.44
Nutrien Stock Quote
Nutrien
POT
VASCO Data Security International, Inc. Stock Quote
VASCO Data Security International, Inc.
OSPN
$11.63 (3.10%) $0.35
Mechel PAO Stock Quote
Mechel PAO
MTL
$2.25 (-2.17%) $0.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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