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
|bbmaven||100.00||Innophos||226.41||Boston Beer (NYS: SAM)||*****|
|vanamonde||99.99||Silicon Motion||319.58||Eastman Kodak (NYS: EK)||*****|
|100ozRound||99.99||First Majestic Silver||399.52||National Oilwell Varco (NYS: NOV)||*****|
^Score is how many percentage points that pick is beating the S&P 500 by.
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
Taste matters to Boston Beer, which is willing to forgo short-term earnings in favor of longer-run consumer loyalty. Its Freshest Beer program sapped $0.05 a share last quarter because of reduced inventory at wholesalers.
Beer shipped to wholesalers can sit on shelves for weeks on end. If not sold, it's dumped down the drain because of inferior taste, costing Boston Beer more than beer money. The brewer loses about $2.5 million annually to such waste. The just-in-time Freshest Beer program costs the Samuel Adams brewer money upfront in reduced inventories, but saves money in the end.
It's a smart, far-thinking management team that's willing to do that, and seems a more cost-effective strategy than Anheuser-Busch InBev's (NYS: BUD) $1.2 billion, six-year advertising deal with the NFL or Molson Coors (NYS: TAP) using "cold activated" aluminum cans as a marketing tool.
CAPS member gilboy7 says higher input costs have hurt, too, but that's a situation that can't last forever: "Grain prices have hurt operating margins at Boston Beer, but when grain prices level off and the bubble bursts, Sam's bottom line will soar. Over sold at this price."
Belly up to the bar on the Boston Beer CAPS page and drink in other investors' opinions.
In search of Bigfoot
Having bounced off its lows of around $1.50 a share, a lot of the hope investors have for Eastman Kodak lies in it being able to developing some serious coin for its patents. In the mad rush to buy up valuable intellectual property following the $4.5 billion paid for Nortel's patents and the $12.5 billion Google shelled out for Motorola Mobility (NYS: MMI) and its patent arsenal, Kodak figured it would get in on the gold rush and auction off some of its own sizable IP portfolio.
Don't count on it achieving much. I've been critical of Kodak's reliance on one-time cash infusions to delude investors into thinking it still has a chance to be relevant. I've conceded its brand name is probably the most valuable asset it has (and, yes, its patents have worth, too), but patent sales amount to little more of the same. Even if it finds someone willing to shell out big bucks, then what? It lives off its bank account for a few years until it finds itself in the same position.
And its patents might not be worth all that much to begin with, and arguably its most valuable patent is the one it's using as a cudgel against Apple and Research In Motion (NAS: RIMM) . But that one's on the auction block, too.
CAPS member daveynels thinks a patent bid would be helpful, though I maintain the best chance Kodak has of realizing real value for investors is through selling itself to the highest bidder. You can follow along by adding Eastman Kodak to your watchlist and see whether it can picture a profitable future.
Delivering solid growth
Assuming the acquisition of Ameron International goes through, oil-field equipment maker National Oilwell Varco will be positioned to capitalize further on Brazil becoming ever more important to the world's oil supply.
Varco is looking for the Latin American country to be an important part of its growth strategy. Because of the sizable discoveries it's made in recent years -- the Tupi field was seemingly just the start of a discovery boom -- it expects Brazil to be one of the most significant markets it services. Ameron, which makes fiberglass composite pipes that oil companies use aboard their marine vessels and offshore oil platforms, would help it secure even more business in the region. Varco signed a $1.5 billion deal last month to supply equipment to the country's top shipyard.
CAPS All-Star tutaemeia likes the picks-and-shovels business model that the company brings to an oil investment:
Oil field machinery & equipment is a nice way to invest in oil. Apart of that, [National Oilwell Varco] is a company with strong fundamentals. Just to have an idea: in the last 5 years, the company registered an annual net sales growth of 16% and have a lot of cash: the quick ratio is almost 1,5x.
But you can tell us on the National Oilwell Varco CAPS page if you think its stock is a good deal at this price.
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 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 Research In Motion, Google, Boston Beer, Molson Coors Brewing, Apple, and National Oilwell Varco. Motley Fool newsletter services have recommended buying shares of Boston Beer, Apple, Google, Molson Coors Brewing, and National Oilwell Varco. 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.
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