Are you the type to take your profits and run? You could be making a big mistake if that investment that appreciated by 100% continues to move higher without you. Put simply, behind every multibagger lies a serial bagger.
Every 10-bagger or 50-bagger out there started out by doubling just once. Like the Energizer Bunny, it just kept going and going.
I'm going to take a closer look at a few companies that have doubled over the past year with strong enough prospects to double again. Yes, even in this trying market, there are stocks that have gone on to enrich the early believers. Four of the 24 stocks recommended in the Rule Breakers newsletter service have gone on to double. Naturally, you'll find plenty more as you widen your pool of candidates to include the entire market.
InfoSonics (AMEX:IFO)
If wireless handsets feel like a cutthroat commodity, belly up to the bar and buy InfoSonics a drink to get to know it a little better. The company has keyed in on serving the boom Latin America market, and it has paid off nicely for the company. The stock has grown fourfold over the past year, on the heels of a strong 2005 that found sales and earnings doubling.
Shares of InfoSonics were soaring even higher before sloppy accounting on stock warrants forced the company to restate earnings and open the floodgates of class action litigation. If you're willing to overlook the misstep, you can buy into a fast-growing company at less than 12 times next year's earnings estimate. The lone analyst following the company expects earnings to grow by 74% this year and accelerate to 79% in 2007. That kind of speed on a multiple that low is a rewarding recipe if InfoSonics is able to live up to the heady expectations.
Home Solutions of America (NASDAQ:HSOA)
It's true. There's a stock out there with the word "home" in its moniker that has appreciated significantly over the past year despite the housing bubble bursting earlier this year. Home Solutions of America has seen its stock triple over the past year, even if it was trading substantially higher just a few months ago.
Home Solutions is in the real estate market and is partnered for remodeling work with many of the companies like Home Depot (NYSE:HD) and Centex (NYSE:CTX) that have been hit hard in the home improvement and real estate development sectors. Offsetting that is the company's disaster recovery services, which have come in handy after two years of devastating hurricanes in the southeast. Last month, Home Solutions raised its outlook. Good luck finding another housing-related name that can claim the same. The company is looking to earn between $0.56 and $0.60 a share this year. That prices the shares at an attractive 10 to 11 times earnings.
TheStreet.com (NASDAQ:TSCM)
Is this a selfish selection? Running a series of financial newsletters anchored by an active free website feels awfully familiar to a company that I hold dear to my heart. If The Street is doing well, it's an encouraging sign that the public's appetite for what The Motley Fool has to offer is also going strong.
I would probably still feel like rooting The Street on anyway. I remember a few years back when things were so bleak that the company's market cap was lower than the cash on its balance sheet. Times change. The company was squarely profitable last year as it continues to mature. You see that maturity in little ways, like last month's initiation of a dividend payout policy or this month's decision to ramp up its video productions.
No, The Street isn't garnering the same rock-bottom earnings multiples as my first two picks, but it still has some slinky upside, given its potential growth at 26 times this year's Wall Street profit estimates and 18 times next year's forecast. Boo-ya!
RealNetworks (NASDAQ:RNWK)
The rich can get richer. Just look at RealNetworks. The company behind the RealPlayer media player and Rhapsody online music service was able to fatten its already cash-heavy balance sheet after announcing a settlement with Microsoft (NASDAQ:MSFT) back in October.
Yes, digital media can be a cutthroat media if you don't have an apple as your logo, but RealNetworks is a pioneer worth banking on. The company has already doubled over the past 12 months, and the future looks bright. After posting 11 consecutive quarterly losses, it has turned a profit in each of the past five quarters.
Ultimately, RealNetworks may be buyout bait for a larger company looking to cash in on the company's technology and established audience. That wouldn't be too bad. Its huge cash balance will make it a pretty cheap purchase, and the company's place in this growing field is undeniable.
Two doubles score a run
Sure, I could be off the mark on these four stocks. Then again, if two of them do go on to double, the other two picks can go to Nil City, and as an investor, I'd still be in the black. That's the point of aggressive investing. You know you're going to wipe out several times, but it's all in pursuit of the perfect wave.
This may seem like an odd time to suggest such an ambitious investing style, I know, but with the market battering great and horrible stocks alike lately, this may very well be the perfect time to become a growth-stock investor and ride a market resurgence to higher ground.
I already told you that four picks from the Rule Breakers newsletter service have gone on to double since being singled out last year. Two of those have actually gone on to more than triple. After you dig a little deeper into the four stock ideas that I presented today, you may want to use a 30-day all-access pass to see what made the four newsletter winners tick.
May the next double be yours, and may it keep on doubling for investors who come in after you.
Home Depot and Microsoft are Inside Value picks.
Longtime Fool contributor Rick Munarriz thinks that nothing is cooler than the unassisted triple play or the ground-rule double. He does not own shares in any of the companies in this story. The Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
