Tomorrow's Monster Stock
Mar 21st 2012 11:14PM
Updated Mar 21st 2012 11:16PM
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 companies 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
|rojostyle||98.26||Bucyrus||575.60||Capstone Turbine (NAS: CPST)||***|
|ShotMeister||90.22||Apple||370.57||Frontier Communications (NYS: FTR)||***|
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
With many wind and solar power alternative-energy plays struggling to succeed even with a little help from taxpayers, there is a one cleantech provider that ought to do well regardless. Microturbine maker Capstone Turbine delivers energy-efficient heat and power for customers on-site through mini-turbines that run on a variety of fuel sources.
For example, buildings that use microturbines can use the energy they create to generate power for the building or use the heat given off by the turbines to heat water. Oil and gas drillers use the microturbines to power their rigs in remote areas, and its 1,000 kilowatt unit microturbines are well suited for utility substations and larger commercial and industrial facilities. It just sold its first such unit to an oil and gas producer, which will generate low-emission electricity onsite to power the plant's pumps and infrastructure systems instead of flaring the waste gas produced as a byproduct of the drilling process.
- There might be a need to use the turbines for on site power at shale gas production sites
- Microturbine hybrid trucks might become commercially viable
- The efficiency in a combined system where they use the waste heat for hot water might be a competitive on site source of power for hotels
My concern is that while Capstone has identified gas producers as a prime growth opportunity, the low price of natural gas is causing drillers to rein in capital spending. Drillers are mothballing rigs and taking production offline. Southwestern Energy (NYS: SWN) , Encana, and Chesapeake Energy (NYS: CHK) have all announced cutbacks in production because of low prices.
Add Capstone Turbine to your Watchlist to see whether it can still generate greater growth.
Hanging up on growth
As mobile communications grow, the importance of landline businesses diminishes, even in the rural areas served by the likes of Frontier Communications and CenturyLink (NYS: CTL) . They witnessed the challenges of trying to emphasize higher-margin services like broadband Internet to their traditional landline customers.
Although Frontier beat analyst estimates for revenues and earnings, they were down from the year-ago period as it lost residential and business customers and felt the impact of lower switched access, video, and directory revenue. It's slowly integrating the Verizon business it took over last year but still saw total access lines decline more than 8% year over year.
Although I've rated Frontier to underperform the markets because of what seems like a slowly dying business, CAPS member texasstranger thinks it will get its act together soon and see the payoff from the Verizon acquisition: "Might be contrarian on this one, but this guy appears very undervalued. Poor earnings and high debt as of late, but this should change when additional infrastructure/capacity from Verizon purchase is running on all cylinders."
Add the rural telecom specialist to your Watchlist, and let us know on the Frontier Communications CAPS page whether you agree that it will be able to reconnect to growth.
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 contributor Rich Duprey holds no position in any company mentioned. Check out his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Chesapeake Energy. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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