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 the monster-trackers at Motley Fool CAPS, the 180,000-member-driven investor community where informed opinion is translated into stock ratings of one to five stars. We’ll be peering in on the picks of those who have successfully chosen stocks that doubled, tripled, or even quadrupled in price, and this week All-Star member mwink gives us satellite-radio operator Sirius XM Radio Inc (NASDAQ:SIRI) as his next monster pick. He made his mark with Apple Inc. (NASDAQ:AAPL), which soared 400% after he picked it to outperform the indexes, compared with the S&P 500’s 17% increase.
Of course, you shouldn’t jump into the breach just because an All-Star stock picker did. Just consider this as a starting point for your own research of extreme buying opportunities.
Debt and equity
With more than 23.9 million subscribers at the end of 2012, the continued growth of Sirius XM Radio Inc (NASDAQ:SIRI) remains predicated on the health of the U.S. auto industry, and as seasonally adjusted sales of light duty vehicles remains above the 15 million mark for the third straight month, the satellite radio operator has a good chance of seeing sales expand.
Yet it’s tough to ignore the growing level of competition, not least of which is the recent deal between General Motors Company (NYSE:GM) and AT&T Inc. (NYSE:T) to offer 4G mobile hotspots in most 2015 model-year cars. Sirius has been able to put off the threat posed by Pandora Media Inc (NYSE:P) and Spotify thus far, but this new option seems a lot more insidious.
Online behind the wheel
Sirius is dismissive of the larger meaning behind the agreement, a brave game face despite its being a herald of things to come. AT&T is simply the first carrier to broadly offer fast connectivity to drivers; it won’t be long before Verizon Communications Inc.(NYSE:VZ) and Sprint Nextel Corporation (NYSE:S) ink similar connected car deals, and GM will only be the first automaker to give car buyers the option of having a true mobile hotspot.
Luxury-car buyers already have limited cellular connections for dashboard apps for their Audis, BMWs, and Tesla Motors Inc (NASDAQ:TSLA)s, and Ford Motor Company (NYSE:F) has also offers some connectivity with certain models, such as the Ford Focus EV. But it’s the breadth of vehicles covered by GM’s plan and the willingness of AT&T to open up its bandwidth to more customers that sets it apart.
And even though it lost the GM OnStar contract to its rival, Verizon’s acquisition of Hughes Telematics last year for $612 million is really a bid to allow it to offer similar services in the future.