Tomorrow's Monster Stocks

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 by 3,000%, 5,000%, and even 24,000% 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 monster stocks, we'll enlist the more than 78,000 investors at Motley Fool CAPS. We've compiled a list of the most successful CAPS players, 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 -- or, for those monster stocks that our CAPS All-Stars have already found, sell. Just consider them starting points for your own further research.

Attacking at the cellular level
Celgene's powerful new cancer-fighter Revlimid is an FDA-approved treatment for multiple myeloma patients, but it also has potential in treating patients who have relapsed with certain types of other cancers. The company was riding high as it staked out a buyout offer of Pharmion (NASDAQ:PHRM) for $2.9 billion, but news of a competing cancer therapy from rival Millennium Pharmaceuticals (NASDAQ:MLNM) caused Celgene to hit a new 52-week low recently, and it may jeopardize the ultimate value of the Pharmion buyout.

Both Celgene and Millennium are desperate for their respective treatments to prove most effective. Revlimid, for example, generated sales of $199 million during Celgene's third quarter, or 57% of the biopharmaceutical's total sales. Millennium, on the other hand, recorded revenue of $70 million during the third quarter, or 58% percent of its revenue, for sales of competing treatment Velcade.

Of the more than 800 investors who've rated Celgene's chances of beating the market, 94% of them think it will outperform. Top-rated CAPS player Firesale, with a 92.87 player rating, notes the company's historical FDA approval for using thalidomide to treat leprosy, and its top Revlimid treatment, but feels there is more than just that:

Celgene has a strong pipeline beyond Revlimid, including drugs that could treat diseases such as asthma, psoriasis, and prostate cancer. Revlimid recently received approval for multiple myeloma in the EU and Swissmedic approved its oral cancer drug the first oral therapy in Switzerland for multiple myeloma patients in more than 40 years. Leading Wall Street analysts see Revlimid achieving $2.8 billion by 2011 and when you consider that Revlimid has a 95% gross margin the long-term outlook look positive. Over 100 trials are in the works. Celgene has an expected 10-year average sales growth of 21%, fueled by explosive growth.

You can read Firesale's complete top bull pitch; at the same link, you'll also find a few bear pitches, including one from the industry analysts at Netscribes. This past February, they felt the stock was trading well ahead of its fundamentals:

Celenge is bound to have strong 2007 on back of robust performance of Revlimid. However many a times stock prices run ahead of fundamentals and this seems to be a perfect example of that. The stock is trading at around 300 times its fiscal 2006 earnings which is much ahead of its peers. The stock has appreciated more than 50% in the last year. Thus it seems that the market has already discounted the promising future of the company. Moreover it seems that the current stock price has not built in potential regulatory risks and the risks associated with clinical trials. Thus the stock despite being on growth trajectory and promising future may not out perform the market.

Today, Celgene trades at a more "reasonable" 116 times its trailing earnings, a position NetScribes still might find too lofty.

A chance for scary growth
Now's your opportunity to weigh in on Celgene, or any of the other stocks these All-Stars see as achieving monster growth. Agree with their views? Tell us on CAPS. If you don't agree, let us know that, too! If you've got an opinion, your voice counts just as much as everyone else's. Let's hear whether you think we've truly uncovered tomorrow's monster stocks.