Tomorrow's Monster Stock
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 are achieving phenomenal returns. Finding just one or two of these monstrously successful firms can help you establish a winning portfolio.
Stalking the monster
To find tomorrow's winners, we've enlisted the help of more than 180,000 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.
Recent Stock Pick
|Charles Schwab (NYS: SCHW)|
|Allied Nevada Gold|
|Claude Resources (NYS: CGR)|
|Sequans Communications (NAS: SQNS)|
CAPS Score = how many percentage points that pick is beating the S&P 500.
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.
Scanning the market
Market volatility can work to the advantage of brokers like Charles Schwab and TD Ameritrade, but not if it ends up scaring investors out of the market.
For example, Schwab reported July monthly activity that showed an 11% improvement from the year-ago period, same as E*TRADE Financial (NAS: ETFC) also recorded. Schwab had net inflows of $9.9 billion in July, compared to $6.5 billion in June and $6.2 billion in June, 2010.
But after Standard & Poor's downgraded the U.S. debt rating earlier this month, the markets are gyrating wildly between gains and losses. This morning alone the Dow Jones Industrial Average climbed 125 points higher after experiencing two straight days of 100-plus point declines, but has since given back much of those gains. It could send investors fleeing for safer havens, such as to gold or maybe even treasuries.
Schwab may have an advantage in that it's expecting its purchase of optionsXpress to close in the third quarter, which ought to boost revenue from increased derivative trading. At least initially, CAPS member mpdelbuono thinks the volatility will play to Schwab's benefit.
Decent valuation. I would not be surprised if Schwab posts better-than-expected earnings simply from commissions; I'm willing to bet trading activity has spiked over the past few weeks with the heightened volatility.
Trade comments on the Charles Schwab CAPS page on whether this volatility will subside herald in a Depression-era flight of capital.
In search of Bigfoot
Well, it's that flight to safety that had gold miner Claude Resources reporting profits more than doubling in the second quarter as gold prices surged 18% even though sales volume only rose incrementally. But its Seabee project continues to be a wonder, providing positive free cash flow, which frees up resources Claude is able to invest elsewhere, with the latest exploration results suggesting it may indeed be a new gold-bearing structure.
That could be why 95% of the CAPS members rating the junior gold miner think it will outperform the broad market averages and 93% of the All-Stars feel the same. You can follow along by adding Claude Resources to your watchlist and see whether it will dig up new growth.
Delivering solid growth -- someday
You can say the wireless markets are in a bit of an upheaval these days, as Google (NAS: GOOG) gobbles up Motorola Mobility and Hewlett-Packard abandons its WebOS platform. Although some analysts suggest the handset maker might make a good candidate to assume WebOS in its battle against Apple, management there says it's staying put with Android and won't even release its own OS as a result. Considering the umbrella of protection the Google acquisition provides to those waging war on the iPhone, HTC says it's a net plus for its own business.
All that has to be good news for Sequans Communications, which went public earlier this year but has found demand for its chips weak. A lot of that just might have to do with its reliance on HTC for the yeoman's portion of its sales, so anything that will strengthen HTC should be seen as a boon to Sequans.
The stock has been battered, trading 70% below its recent highs. And though just one of the All-Stars rating Sequans does think it will be able to outperform the broad market averages, more members coming on board these days are finding it difficult to overlook its discounted valuation. But you can tell us on the Sequans CAPS page if you think its stock is a good deal at this lower level.
A chance for scary growth
It takes more than a few All-Star picks and a quick pitch to make buy or sell decisions, so start your own research on these stocks on Motley Fool CAPS and marvel at the range of opinions there.
At the time this article was published The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services have recommended buying shares of optionsXpress Holdings, Apple, Charles Schwab, and Google. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his portfolio here.
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