Tomorrow's Monster Stock
Apr 16th 2012 10:35PM
Updated Apr 16th 2012 11:06PM
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
|niacinb3||94.20||Sanmina-SCI||125.61||Dendreon (NAS: DNDN)||**|
|rhh0876||90.72||Allscripts||100.47||Westport Innovations (NAS: WPRT)||*****|
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
Because prostate cancer is so prevalent, Dendreon's Provenge has an opportunity to make a huge, positive change in the lives of those afflicted with advanced stages of the disease. Even with a high price tag for treatment, reimbursement for the cost is available, so it's no longer much of a concern. Sales are growing, and the drugmaker surprised everyone last quarter with much higher revenues than anticipated. So why is the stock still in the doldrums? In a word, competition.
Johnson & Johnson makes competing therapy Zytiga, which is growing sales even faster than Provenge -- they hit $280 million last year, and analysts expect peak sales over $1 billion -- and MDV3100, an uber-promising drug in late stage trials by Medivation (NAS: MDVN) . Last November, it said that when taken orally, MDV3100 helped patients live an average of five months longer than a placebo while causing only mild side effects. Exelixis (NAS: EXEL) is also far along in its studies on cabozantinib, and AstraZeneca has Taxotere on the market. Big market opportunities attract a lot of rivals to the space.
That could be why although 84% of the CAPS members rating Dendreon see it outperforming the market, it carries a low, two-star rating. They believe there are better places for your money. Add Dendreon to your Watchlist and then let me know in the comments section below or on the Dendreon CAPS page whether you think there's reason to believe that Provenge can outrun the competition.
An innovative solution
For a stock that has appreciated more than 700% since I first rated it to outperform the market on CAPS back in 2008, it might be difficult to look at Westport Innovations as a company that still has monster potential before it. And though its shares have fallen 30% from the peak it hit last month, making those previous returns all the more impressive, I have yet to close out my recommendation and don't intend to do so. Too bad we don't have a "double down" option on CAPS.
The forces that fueled a decline in natural gas companies are the same ones that will push Westport to new highs again. Despite succumbing to the fumes of record high inventories, warm weather, and a weak economy, its sheer plenteousness is what will put Westport's natural gas engines in demand. Even JV partner Cummins sees the potential, and that's why it wants to strike out on its own with building nat gas engines, It also explains why 3M is partnering with Chesapeake Energy (NYS: CHK) on the development of an advanced gas tank for natural gas vehicles.
Alternative-energy stocks in the solar and wind sectors leave me cold; natural gas, though, gets my engines running because of the vast domestic supplies of the fuel we have. Truck fleets are already converting to the fuel, and T. Boone Pickens is building his national network of filling stations. The rise of both will make this a winning investment again. As bizcbug7 succinctly puts it, "Cheap, abundant natural gas meets new technology."
Add the natural gas specialist to your Watchlist, and let us know on the Westport Innovations CAPS page whether you agree that it will be able to rev up its growth engine.
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. The Motley Fool owns shares of Johnson & Johnson, Dendreon, Westport Innovations, and Exelixis. Motley Fool newsletter services have recommended buying shares of Chesapeake Energy, 3M, Johnson & Johnson, Cummins, Exelixis, and Westport Innovations and creating diagonal call positions in 3M and Johnson & Johnson. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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