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
|BravoBevo||99.97||DineEquity||386.88||Human Genome Sciences (NAS: HGSI)||**|
|translator999||99.96||Heartland Payment Systems||352.22||Nuance Communications (NAS: NUAN)||****|
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.
Hiding in plain sight
Even if Benlysta isn't going to hit billion-dollar blockbuster status, we're getting a sense of how big the market could be for the lupus treatment as Human Genome Sciences reports slow and steady improvement in sales. Revenues for the biotech more than doubled YOY, to $45.5 million, as Benlysta alone contributed almost $26 million and rumors continue that it's a takeover target. Previously it was suggested that marketing partner GlaxoSmithKline (NYS: GSK) wanted to buy it out for $25 a share, but after a slow rollout for Benlysta, no firm buyers have yet emerged.
As the first new treatment for lupus in 50 years, Benlysta should see a ramp-up in demand, particularly if the U.K.'s government-run healthcare system changes its mind and pays for the cost of the treatment. Currently it's got limited opportunity there, because regulators don't see its benefits as outweighing the costs, but that's still a preliminary decision, and further negotiations with Glaxo could ultimately see Benlysta accepted.
With the rest of the world pretty much on board, however, investors are backing HGS, and 80% of the CAPS members rating it believe it will go on to outperform the broad indexes. Add Human Genome Sciences to your Watchlist to see if it can turn this opportunity into a blockbuster deal.
Down but not out?
It's only a couple of days shy of two months since I voiced concerns about Nuance Communications' acquisitive nature -- it bought six companies in 2011 and five the year before that - and now it's gone out and bought its first one for 2012, offering over $300 million for Transcend Services (NAS: TRCR) . While its stock price would seem to laugh in the face of the investing notion that takeovers routinely destroy value for the purchaser, it still makes it difficult to value the business because of all the moving parts.
Many investors, however, were hanging their investment hats on Nuance making it into the new iPad, since providing Siri's voice on the iPhone 4s cemented its relationship with Apple (NAS: AAPL) . It turns out, however, that the next-gen iPad instead offers only simple hands-free transcription, not Siri's further helpful assistance (even if it does sound like the disembodied voice of Omid Malekan's animations that explain complex topics such as "the quantitative easing" and gave rise to phrases like "the Bernank").
Although I've rated Nuance to underperform the markets over the long haul because of its penchant for rolling up the industry under its roof, another Foolish colleague, Anders Bylund (TMFZahrim on CAPS), isn't concerned that Nuance has given back some of its recent gains.
Nuance hit a little speed bump and investors are treating it like a spike strip? Fine by me -- the company is a human-to-machine interface juggernaut that is just getting started. The long-term opportunity is larger than ever, just hidden behind those lumbering but unstoppable long-term mobile agreements.
Add the speech recognition specialist to your Watchlist and let us know on the Nuance Communications CAPS page if you agree it will be able to talk itself out of this little setback.
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.Click hereto see his holdings and a short bio. The Motley Fool owns shares of Apple.Motley Fool newsletter serviceshave recommended buying shares of Nuance Communications, Apple, and GlaxoSmithKline.Motley Fool newsletter serviceshave recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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