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 the 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
Human Genome Sciences
Annaly Capital Management (NYS: NLY)
Netflix (NAS: NFLX)
General Growth Properties
Sequans Communications (NYS: SQNS)
Source: Motley Fool CAPS. Score is 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.
These yields just keep getting bigger
Profiting from the spread between their borrowing costs and the amount they can earn on their mortgage-backed securities investments, mortgage REITs like Annaly Capital Management, American Capital Agency (NAS: AGNC) , and Chimera Investment (NYS: CIM) thrive in a low interest rate environment like we're experiencing.
They suffered a bit of a tumble yesterday as the financial markets shook over the prospects of Greece not meeting its austerity obligations. The CAPS REITs industry was down 6% as a whole yesterday. With Annaly's dividend yield north of 14%, CAPS member cizastro says the REIT has capable, competent management that makes the payout safe:
Annaly Capital Management has proven that they can weather the storm and pay out an incredible 14 % dividend. I will be watching this one as the market continues to fall. The higher the yield you can get on this one, the bigger the winner you can end up with. Not too shabby having a stock that pays out 14% in a market like this.
See what others are saying on the Annaly Capital Management CAPS page and add the stock to the Fool's free portfolio tracker to see if management can continue outperforming the market.
Searching for a better sequel
Movie rental king Netflix took it on the chin when it misjudged customer outrage over its plans to increase prices by charging separately for DVD rentals and streaming movies. While movies-through-the-mail customers actually saw their monthly fee fall, having to pay for something you were previously given as a bonus amounted to a price increase in the eyes of consumers.
The PR fiasco bolstered the prospects of movie kiosk specialist Coinstar (NAS: CSTR) as customers viewed its Redbox as a sufficient alternative. Since many already thought Netflix's streaming library had limited depth and value, a $1.00 rental option for current movie titles seems like a good bargain. Streaming may be the future, but we're still very much living in the present.
CAPS member gameguru acknowledges Netflix's miscues, but says its current price, 60% below the 52-week high hit in July, more than factors it in:
The company has made some serious missteps, but that has finally been priced in by the market. It is selling at about 28x earnings and actually looking attractive on a cash-flow basis; pretty good value for a company with lots of growth yet ahead.
You can follow along by adding Netflix to your watchlist and see whether it can get its name back up on the marquee.
Chipping away at the competition
4G wireless specialist Sequans Communications is hurrying to add long-term evolution (LTE) products to its bevy of WiMAX offerings, but its reliance on the latter is taking a toll on performance. Since IPO'ing in April, shares trade for just a quarter of the value they held at its peak.
Handset maker HTC is Sequans' biggest customer, and margins have taken a hit as HTC has met the conditions to receive volume discounts from Sequans. But Sequans also warned that future sales growth will likely slow as a great deal of uncertainty remains over whether new models will be introduced in the North American market, where LTE is gaining better traction.
Sequans did win Chinese government approval for its 4G LTE chips, which it was testing with Huawei and Alcatel-Lucent (NYS: ALU) . China Mobile picked Huawei to test out its TD-LTE trial network in Shenzhen and chose Sequans for large-scale testing there of its LTE chip technology.
Since it's still new to the market, the chip maker is flying below the radar of much of Wall Street and Main Street, but 89% of the 73 CAPS members rating Sequans believe it will outperform the broad market averages. Tell us in the comments section below or on the Sequans Communications CAPS page if this is just the start of getting the ball rolling. Add the stock to your watchlist to see if it makes a connection.
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 thisarticle was published Fool contributor Rich Duprey holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Annaly Capital Management, IPG Photonics, Chimera Investment, and China Mobile. Motley Fool newsletter services have recommended buying shares of China Mobile, Netflix, IPG Photonics, and Coinstar, along with creating a bear put spread position in Netflix. 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.
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