Tomorrow's Monster Stocks?

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 achieve phenomenal returns and happen to share some common traits: They're small, obscure, and ignored. Finding just one or two of these monstrously successful companies can help you establish a winning portfolio.

Stalking the monster
To find tomorrow's winners, we've enlisted the help of the more than 135,000 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 -- or, 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
Tweaking a revenue model always seems to unsettle Wall Street analysts, who ponder how the changes will affect the way money is earned at the company. This past June, Baidu.com unveiled a new plan for its search engine that had some analysts biting their nails.

Baidu said it would close its 8-year-old bid-ranking system in favor of a Google (NASDAQ:GOOG) Adwords-style keyword bidding system called Phoenix Nest. Because the new platform is a bit more complicated and has new features, Baidu has allowed Phoenix Nest to fly alongside its old system in order to give users time to adjust.

Analysts' fears have been easily assuaged, as second-quarter revenue jumped by 37% and management raised expectations for third-quarter revenue growth due to favorable acceptance of the new system.

At almost 69 times earnings, Baidu.com is anything but cheap, and it may even be overpriced relative to its future estimated growth. CAPS member mbizee thinks the stock has simply come too far in so short a period of time; All-Star member lovinoptions agrees:

All good things come to an end. They are growing (price wise) too fast to actually stay there. I would look for it to pull back within the next month or so. The forward P/E is half of the current one.

Not taking wing
While Savient Pharmaceuticals disappointed investors, such as CAPS member JBG76, who believed the company's gout treatment would be approved, management has downplayed the FDA's rejection and said it is hopeful it can resubmit its application by early next year. JBG76 writes:

I believe their gout treatment drug Krystexxa will receive approval with some level of monitoring. I do not think it is a coincidence that Savient recently hired one of Wyeth's vice presidents. I will keep my eyes open for a possible tender after FDA approval.

It was only two months ago that the FDA said Krystexxa appeared to successfully treat its target patient population, albeit with some potentially serious side effects. The FDA's panel of experts recommended 14-1 to approve the drug, so the denial letter was a bit of a shock. While its new discounted valuation might make Savient seem like a more attractive takeover candidate than it did before, investors are likely to find the stock trading flat until more information emerges, as the company works with the FDA to resolve its objections.

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.