The Greatest Stock Story Ever Told

Can you spot a winner? I can. Maybe not always, but more often than not. I call it my special purpose.

But can it make you rich?
Maybe. Imagine you paid that guy Hiro from Heroes to bend time and space. You could whisk back to July 1995 and buy Dell (Nasdaq: DELL  ) . Take along an old sword and $1,000, and you can pop back with $39,000 just 10 years later.

While you're at it, why not grab some AOL for $1.66, before the Time Warner (NYSE: TWX  ) hookup debacle. That nets you another 10 grand. Cisco Systems (Nasdaq: CSCO  ) morphs $1,000 into $6,000.

You're probably wondering: If you could bend space and time, why invest only $1,000? Well, that's what you should be wondering. But you're really wondering whether I'm pulling these big numbers out of my hat. Well, I'm not. I'll even show you a table to prove it.

That's right, I said a table
In fact, I heard about all three (and others you're about to see) one sunny day in 1995. And every one of those stories made perfect sense to me. Remember, we're not talking 1989 here.

With the one exception of AOL, every business we'll discuss today was fairly well proven by 1995. They were industry leaders ... they were run by entrepreneurial zealots ... they essentially printed cash ... and insiders loved the stock.

And they were only modestly huge at the time, which made them attractive to institutions, yet still left them room to run. Only one thing could have made them better, as you'll soon see. But first, it's time I revealed my source and showed you that table.

I won't keep you hanging
Tom Gardner turned me onto those stocks in 1995, plus the others in the table below. Tom's a founder of The Motley Fool. He's also bald and tells good stories. In 1995, he got it into his bald head to build a portfolio we could hold for 10 years.

Here's how we fared:

Company

7/7/95

7/5/05

Return

Dell

$1.00

$39.85

3,885%

AOL

$1.66

$16.48

893%

Cisco

$3.07

$18.82

513%

Sun Microsystems (Nasdaq: JAVA  )

$1.00

$3.64

129%

Gap (NYSE: GPS  )

$5.11

$20.26

296%

* All prices adjusted for splits and dividends.

Actually, there were 10 stocks in all. After 10 years, we "simpletons" were up 667% (versus 147% for the S&P 500) -- turning $10,000 into some $77,000.

But you could have done better
Of course, you'd have to go further back in time -- when these companies were smaller. If you'd bought Dell in 1991, for instance, you'd have ended up with four times as much. Same with Cisco. Clearly, great stocks get greater when you get in early.

That's why, as great a company as it is, megacap software giant Oracle (Nasdaq: ORCL  ) didn't make Tim Hanson's list of the market's 10 best stocks. But up-and-coming fruit juice giant Hansen Natural (Nasdaq: HANS  ) did -- it was up 21,000% in 10 years.

That's also why Tom Gardner hand-picked and trained a team of analysts to apply his method to dig up small companies for his Motley Fool Hidden Gems subscribers. It may even be why a dozen of his team's picks have doubled since 2003 and why his entire portfolio is still beating the broader market by better than eight percentage points -- even after the recent pullback.

Of course, I don't know that for certain
But I do know this: Our chances of catching a 21,000% gainer skyrocket when we buy small companies, especially when stocks are on sale like they are now. We just need to know a good story when we hear one. Or hear better stories. That's why I think you should meet the Hidden Gems team.

Especially now that you can sample the entire Hidden Gems small-cap service for free. There's no pressure to join, and you can read over five full years of great stories for an entire month while you mull it over. That includes more than 100 small-cap value picks, many from the guy who told me about AOL in 1995 -- for free. To learn more, click here.

This article was originally published on Dec. 5, 2006. It has been updated.

Fool writer Paul Elliott doesn't own any of the stocks mentioned. Gap is a Motley Fool Stock Advisor recommendation. Gap and Dell are also Inside Value picks. The Motley Fool has a disclosure policy.


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