Tomorrow's Monster Stock?

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 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 -- nor, 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
Like dominoes tumbling one after another, the accounting irregularities uncovered at Huron Consulting Group in August are still causing problems for the company.

Huron's audit committee uncovered an "agreement" in which shareholders of at least one company it purchased had redistributed their acquisition-related payments among themselves, as well as to some Huron employees. The entire Huron management team was ultimately let go, and the company restated three years of results. Try not to snicker when I mention that Huron was founded by a group of refugees from Enron's accounting firm, Arthur Andersen.

While still trading well below the level it had reached prior to the scandal, Huron's share price is up 34% in the last month, and it's more than doubled from the low point it hit when the irregularities were uncovered. That gives Huron a market multiple well in excess of industry peers untainted by scandal, such as FTI Consulting and Accenture (NYSE:ACN).

Many investors, though, feel the reaction to the revelation was overwrought to begin with. A couple of months ago when the scandal hit, CAPS member GREEDRULES thought the company took the right steps to handle the situation:

The accounting scandals are not fun news for any investor. This company got hit by relatively mild one (nothing like Enron or Nortel one). The company reacted swiftly by firing at leas directly responsible ones. The market is extremely sensitive now to anything scetchy with pletny of choice of other undervalued companies. That is why this company was slammed by investors. If there will be no sequial to the recent development, this will be a star if there is something else, Huron could be a history.

Investors who've gambled on a quick turnaround in Huron, however, might want to use extra caution here. The consulting firm reports that it has further reduced its credit facility to $180 million, cutting the amount of money it can borrow by 25%. Fees associated with the facility also increased, and leverage ratios were reduced, putting the company on a shorter leash. Perhaps most troublingly, Huron will likely have to write down its goodwill because of impairments.

True, goodwill is an "artificial" asset, created when a company pays more than the tangible value for a business it acquires. That's why, when companies write down goodwill, they make certain to point out that the charges are "non-cash." The process of reducing a company's assets wreaks havoc on a balance sheet, and on the company's GAAP earnings. For Huron, goodwill accounted for nearly two-thirds of its total assets as of the end of June, and any change will hurt earnings.

SEC investigations continue, and shareholder lawsuits abound. Investors would be wise to tread carefully here.

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.