5 Stocks With Multibagger Potential

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The investing legend Peter Lynch once remarked, "All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don't work out."

We completely agree. That's why our 10-Bagger Portfolio is looking to place prudent bets on outstanding businesses. We're confident that a few big winners will reward us all tremendously.

With that in mind, here are some companies that we believe have multibagger potential over the long term. We'll be following them closely in the coming weeks as we consider them for our real-money portfolio.

  1. Westport Innovations (NAS: WPRT)  
    Westport Innovations designs fuel technologies to help engines run on natural gas. As the natural gas distribution system along our major highways builds out, more and more vehicles will likely convert to natural gas. That will be very good news for Westport, which has seen its share price plunge in recent weeks.
  2. SandRidge Energy (NYS: SD)
    SandRidge Energy is a company that switched from natural gas to oil before the rest of the crowd. That was a wise decision in light of declining natural gas prices. Although the company took on considerable debt to fund the switch, the prescient bet is starting to pay off.
  3. Solazyme (NAS: SZYM)
    Solazyme is an alternative energy company that makes oils from a fermentation process using microalgae. The company has a proven process, and is now investing heavily to scale it up to meet the demand it is expecting. Solazyme's share price is down considerably since its IPO in 2011, so this idea is somewhat risky.
  4. E-Commerce China Dangdang (NYS: DANG)
    Dangdang is a small Chinese retailer that sells books, periodicals, and a wide variety of other products. The company is still in the process of building a platform that can serve as many customers as possible. There's still quite a lot of work to be done, but the potential here is incredible. The risks are no doubt very high as well. Investors would need a strong stomach for this one.
  5. Jive Software (NAS: JIVE)  
    Jive Software has created a collaboration platform for businesses to use in order to create and market products. The company continues to sign up new customers and has an opportunity to increase licenses with new and existing companies. The company's share price has been on quite a run of late, so we'll be taking a closer look at this business.

Time to learn more
We think the five stocks above might have multibagger potential, but we intend to learn a lot more about them before possibly adding them to our 10-Bagger portfolio. In the meantime, we'll be sharing additional insights on these companies on Fool.com and @10-Bagger Stocks on Twitter. You may also want to add each of the companies mentioned above to your very own My Watchlist, so you can track and monitor their progress.

At the time this article was published Neither John Reeves nor David Meier owns shares in any of the companies mentioned above.The Motley Fool owns shares of Westport Innovations and Solazyme.Motley Fool newsletter serviceshave recommended buying shares of Westport Innovations. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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