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 that have sound business prospects and 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
|BravoBevo||99.98||DineEquity||386.88||Popular (NAS: BPOP)||***|
|chk999||100.00||Chinalco||105.66||Terra Nitrogen (NYS: TNH)||*****|
|zzlangerhans||99.22||Medivation||201.39||YM BioSciences (ASE: YMI)||***|
Score is by 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.
Hiding in plain sight
From Hudson City Bancorp (NAS: HCBK) to Wells Fargo (NYS: WFC) , banks are setting aside lower amounts to pay for loans that go into default. Loan-loss provisions at financial institutions have been on the decline as the economy struggles for stability, but not uniformly and not everywhere. Popular, the Puerto Rican parent of Banco Popular, had to increase by $55 million the amount it set aside as the tiny island's economy continues to suffer. It's down from the year-ago period but up sequentially, indicating that things are deteriorating and making it one of the worst-performing regional banks this year.
The catalyst here is that Popular's branches are also located in some of the largest continental states, so that if (or rather when) the economy gets going, the bank ought to bounce back. And as it trades at a small fraction of its book value, it represents a significant discount particularly in comparison with many of its rivals.
With more than 500 CAPS members weighing in on the bank, 89% still believe it will go on to beat the Street. Let us know in the comments section below what you think of the situation, and then add Popular to your watchlist to see whether it cracks under the pressure.
A long time coming
After the resilience the agriculture sector has been showing in the face of economic uncertainty, it's not surprising that Terra Nitrogen has been a stellar performer this year, its stock rising 63% over the past 12 months. And it seemingly is an easy bet that there are more gains in its future.
Nitrogen is obviously a key fertilizer component, though individual crop pricing will wreak havoc with some companies, like CF Industries (NYS: CF) -- a major stakeholder in Terra -- whose own recent results have been less than stellar as corn prices plunged amid weak demand.
In choosing Terra Nitrogen as his next monster stock, CAPS All-Star chk999 noted its dividend, currently yielding more than 10%, as an added benefit of investing here.
You can let us know on the Terra Nitrogen CAPS page if you think the high yield signals danger, and then add the stock to the Fool's free portfolio tracker and see whether the bulls or bears have it right.
A rocket higher?
Although Incyte (NAS: INCY) was first to market with Jakafi, a twice-daily therapy for myelofibrosis, YM Biosciences JAK1 and JAK2 Inhibitor CYT387 is a once-a-day treatment that is likely to take a good portion of whatever share its rival's drug is able to gain in the interim before approval. It reported "significant and durable responses" in ongoing phase 1 and phase 2 trials last week, which ought to be a cause for pause among Incyte investors.
With 97% of the CAPS members rating YM to outperform the broad market averages, they think the road ahead looks clear. But that road is still very long, and there are many hurdles ahead before it gets FDA clearance. Tell us in the comments section below or on the YM BioSciences CAPS page if you think investors are not using enough caution when it comes to extrapolating early stage trials to the future. Add it to your watchlist to check on its progress and see whether such confidence is warranted or whether it will suffer the fate other promising drugs have met once they've undergone more rigorous testing.
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.
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At the time this article was published Fool contributorRich Dupreyholds no position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool owns shares of and has created a covered strangle position on Wells Fargo. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.