The best stocks? Is that
reallywhat I'm going to write about, after a year in
which the S&P 500 dropped by nearly 40%?
It is, actually. You learn pretty rapidly in this business
that the best way to make money in the market is to invest
for the long term, and you recognize that volatility is part
of the ride. And when you commit to the long term, you
quickly discover that the stocks that offer the best returns
today aren't well-known, widely owned names.
But I'm getting ahead of myself. Before I can get to the
takeaway, I have to show you the data. This is a simple list
of the top-performing stocks of the past 10 years. I compile
this list at the end of every year, and every year, it yields
the same fascinating insight:
Company
Return, 1999 - 2008
Jan. 1, 1999, Market Cap
Hansen Natural
4,891%
$53 million
Celgene
4,214%
$252 million
Quality Systems
4,130%
$26 million
Clean Harbors
4,129%
$16 million
Green Mountain Coffee Roasters
4,122%
$19 million
Deckers Outdoor
3,551%
$19 million
Almost Family
3,171%
$9 million
Southwestern Energy
2,990%
$187 million
FTI Consulting
2,879%
$16 million
XTO Energy
2,839%
$343 million
Data from Capital IQ, a division of
Standard & Poor's. Includes only U.S.-listed stocks
with verifiable stock price histories on major
exchanges.
The trait that sets these stocks apart
What does an energy-drink maker (Hansen) have in common
with a biotechnology leader (Celgene)? A home-nursing
practitioner (Almost Family) with the makers of Ugg boots
(Deckers)? A natural-gas driller (XTO) with some guys who
sell java (Green Mountain)?
On the face of it, not much. But if you look closely,
you'll see that these were all
very small companieswhen their amazing stock market
runs began.
To see just how important it is to start small in the
market, take a look at the returns that the 10 best large
caps offered over the same period of time:
Company
Return, 1999 - 2008
Jan. 1, 1999, Market Cap
China Mobile
574%
$20 billion
BHP Billiton
554%
$16 billion
Telmex (NYSE: TII)
546%
$19 billion
Royal Bank of Canada
243%
$15 billion
Southern
237%
$20 billion
Bank of Nova Scotia (NYSE: BNS)
232%
$11 billion
ConocoPhillips
143%
$11 billion
Rio Tinto
187%
$16 billion
Nike
184%
$12 billion
ExxonMobil
171%
$178 billion Continued... |