Three months ago, I took a look at four companies that had doubled over the past year. With a few more interesting stocks popping onto some of my screens, I figured now would be a great time to review some more opportunities.
Just because a stock doubles doesn't mean that it's overvalued. Just because a stock explodes skyward doesn't mean that it's done. Every 10-bagger -- every 100-bagger -- started out by doubling once. Then it just kept going.
The Motley Fool Rule Breakers newsletter service has found some of its biggest winners by looking at stocks that have already had spectacular runs. Many have gone on to appreciate even further under the "buy high, sell higher" mantra. At the moment, the average recommendation has quadrupled the market's return, so something there must be working.
Let's take a look at three recent high-fliers that have what it takes to keep going.
Speaking of which, this past quarter saw revenues soar by 177%. Profits weren't as kind, inching only slightly higher due to the end of tax-loss carry-forwards. The company is looking to earn between $0.38 and $0.43 a share this year. That may not seem like much, pricing the company at roughly 50 times earnings, but it's an unfair bottom-line figure. Because of the company's buying spree, that figure is weighed down by the costs of accounting for those purchases. Going with EBITDA, a figure I normally loathe but will accept in this case given the company's tax base and acquisitions, aQuantive is expecting that sum to come in between $0.88 and $0.92 per share.
Netflix shares dipped into the single digits last October and again in March. Then some pretty amazing things began to happen. Blockbuster's board was shaken up and its creditors started getting antsy about Blockbuster's cash-burning online business. Amazon launched a DVD-rental service in the United Kingdom, but at prices that would never fly in this country's competitive landscape. Netflix, after a red quarter, returned to profitability earlier than the market had anticipated.
The end result is a company that continues to grow -- it's more than 3 million members strong at the moment -- and has yet to tap into the potential of using its network to distribute other forms of light media or advertise to its customer base. After its slip, the company expects to grow its pre-tax profits at a 50% clip for several years.
I wrote about the company back in March as part of my 2005 edition of "10 Stocks Under $10." It was trading at $6.10 at the time. It has since moved into the double digits. Good looks. Great personality. What's not to like?
This past quarter saw the company's revenue climb 25% higher, 45% higher in the key component of online advertising. As the company establishes itself as the top site for couples on the cusp of matrimony, TheKnot.com has begun to expand its business by launching a specialty site for newlyweds -- TheNest.com -- and acquiring a pair of dating sites. In other words, the company has brilliantly extended its reach further into the courtship process on both ends. There are too many companies with deep pockets out there eyeing companies like this and iVillage
Turning in a pair of double plays
What do you think? Have you come across a company that may be riding a wave of favorable momentum lately? Think it can keep it going? If so, you're probably just the kind of investor who would appreciate our Rule Breakers newsletter service. A subscription will land you in the hunt for the next batch of ultimate growth stocks.
Beyond the monthly recommendations, you'll be tapping into perpetual insight on the latest marketplace trends. You're probably already a good investor. Take us up on a 30-day free trial to see if you have what it takes to become a great one. May the next double be yours.
Netflix and Amazon are Motley Fool Stock Advisor picks.
Longtime Fool contributor Rick Munarriz thinks that nothing is cooler than the unassisted triple play. He owns shares in Netflix. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.