The Best-Performing Stock on the S&P 500 Since 1980

Source: The Motley Fool

If you love money, this will blow your mind.

In 1980, had you invested a mere $1,000 in what went on to become the top-performing stock of S&P 500 (SNPINDEX: ^GSPC  ) , then you would be sitting on a cool $1.2 million today.

That equates to a total return of 120,936%.

The stock? None other than Gap (NYSE: GPS  ) .

You read that right. According to an analysis of the "entire universe of U.S. based stocks publicly traded since 1980," M&T Bank found that the multi-branded retailer scored the top spot among all of the stocks that are currently on the S&P 500.

What's perhaps more interesting is that Gap was in exceptionally good company, as four of the top five S&P 500 components on the list were all retailers.

You can see evidence in the following graphic, which charts how much a $1,000 investment in 1980 would be worth with respect to each of these stocks today.

Coming in second is L Brands (NYSE: LB  ) , the retail concern behind Victoria's Secret and Bath & Body Works, among others, with a compound annual growth rate of 22.9%. Third is TJX (NYSE: TJX  ) , the "off-price apparel and home fashions retailer" behind T.J. Maxx and Marshalls, among others, with a CAGR of 22.8%. And in fourth place is Wal-Mart (NYSE: WMT  ) , the world's largest retailer, with a CAGR of 21.9%.

It's also worth pointing out that all of these are, to varying extents, discount retailers that were positioned perfectly to take advantage of the Great Bull Market that got under way in 1982. And all of them have since grown alongside the American consumer. Their total returns (rounded to the nearest 1,000%) come out to be 90,000%, 88,000%, and 69,000%, respectively.

The lesson here is simple. The opportunity to invest in great companies coupled with the magical power of compounding returns can make prescient and patient investors very rich.

Discover one of today's top stocks
The Motley Fool's chief investment officer has selected his No. 1 stock for this year. Find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

Read/Post Comments (2) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 21, 2013, at 6:29 PM, prginww wrote:

    The problem with these kinds of studies is that they don't require constant eps growth.

    It's like pointing out the Steelers won the most Super Bowls over the past 40 years. It doesn't mean you should bet on them this year.

    The Gap (GPS) rose to over $50 in 1999 and hasn't been back since.

    It dropped like a rock and bounced between roughly $10 and $20 from 2002 to 2012, when it took off into the $40s and is now $41.55.

    The revenue hit $16.3B in 2006, then began falling until it reached $14.2B in 2010. It's risen to $15.7B but the increase has not been steady.

    It's been a little better growing earnings where its EPS has fallen only twice in the past decade.

    A red flag is that it's Long Term Debt has risen from 14.7% of capitalization in 2007 to 40.2% now.

  • Report this Comment On December 24, 2014, at 10:06 AM, prginww wrote:

    Read the last line:

    "The lesson here is simple. The opportunity to invest in great companies coupled with the magical power of compounding returns can make prescient and patient investors very rich."

    I would add that if you can pick the trends that will be great over the next 10-20 years, then you'll be rich. The question is which companies will zoom along with the headwinds of those positive trends. Consumerism in the 80's and 90's was a strong trend to invest in during those times. Over the next 10-15 years, our best trends are likely to be healthcare, on-line video content providers (think Netflix), consumer stocks - especially those multi-branded consumer stores and online shopping, home supplies and builders - more 35-50 year olds so strong demographics will be good for the home improvement sector too, eating out - I think there will be a return to eating out -- more at an upper scale, non-fast food, health conscious type eating...fro-yo and organic is in, McDonalds is out.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2648299, ~/Articles/ArticleHandler.aspx, 9/29/2016 11:32:14 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,274.70 -64.54 -0.35%
S&P 500 2,163.95 -7.42 -0.34%
NASD 5,289.19 -29.36 -0.55%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/29/2016 11:19 AM
^GSPC $2163.74 Down -7.63 -0.35%
S&P 500 INDEX CAPS Rating: No stars
GPS $22.11 Up +0.05 +0.23%
Gap CAPS Rating: **
LB $70.85 Down -0.10 -0.14%
L Brands CAPS Rating: ****
TJX $74.54 Up +0.15 +0.20%
The TJX Companies CAPS Rating: *****
WMT $70.98 Down -0.81 -1.13%
Wal-Mart Stores CAPS Rating: ***