Stocks: The Double-Your-Money Club

(page 2 of 2)

Consider Stock Movement

But William Van Keulen, of Colorado Springs (Co.) financial adviser Carnick & Co., avoids a strategy focused exclusively on value. "We don't like bottom fishing," he says. Investing in cheap stocks can be "a little bit like catching a falling knife many times, depending on where the economy is going."

Van Keulen also uses technical analysis—the study of a stock's movement in the market—to find his favorite picks, which included software companies Ansys (ANSS) and IHS (IHS).

Pessimistic Picks

Richard Sparks of Schaeffer's Investment Research, an expert on technicals, says it's a good sign if market data indicate a lot of skepticism toward a stock. For example, a lot of short interest in a stock—i.e., investors betting the price will fall—can actually help a stock rally quickly if a rising share price forces short sellers to buy back shares.

Sparks' picks, glassmaker Apogee Enterprises (APOG) and Volterra Semiconductor (VLTR), both face a lot of market pessimism, he says.

Short-Term Choices

Of course, when stocks fall out of favor with the market, it's often for good reasons. Thyra Zerhusen, manager of the Aston/Optimum Mid Cap Fund (CHTTX), looks for stocks selling at a discount for bad reasons.

"We look for short-term trouble," Zerhusen says. Her top picks may have "stumbled short term, but it can be corrected." She thinks Chicago Bridge & Iron (CBI) and Jabil Circuit (JBL) could double, proving their doubters wrong.

Despite the risky environment, some believe this is the perfect time to be hunting for stocks with large upside potential. Carnick & Co.'s Van Keulen says he and his colleagues "salivate" over stocks at a time like this. With the broad Standard & Poor's 500-stock index down 10.6% in the past seven months, he sees many stocks trading at reasonable prices.

See the accompanying slide show for the full list of stocks our experts say could double, and for more information on each of the picks.

Steverman is a reporter for BusinessWeek's Investing channel.