How I Tripled My Money in a Year

Even a minor pullback can't overshadow the amazing growth of surgical-robot specialist Intuitive Surgical. Before the market's recent slump, its shares had more than tripled in a little more than a year. Lucky me -- I bought in at $95 per share in September 2006.

I'd like to brag that I found the company on my own, but I discovered this one through our Motley Fool Rule Breakers growth investing service. Intuitive's impressive rise has taught me a fascinating lesson about growth stocks' power to multiply your money.

Wonderful math
At this point, Intuitive Surgical's stock is a little below $300 per share, after having surpassed $350 a few months ago. In cocktail-party parlance, I'm almost sitting on a "three-bagger." Better yet, the company is still growing, and it has many admirers. Last time I checked our Motley Fool CAPS stock rating service, 94% of the 3,043 participants rating the stock were bullish on it. Among the 1,066 All-Star participants -- players whose returns consistently outscore their peers -- rating the stock, 95% are bullish.

The stock's rapid rise has led me to marvel at the math behind its progress. If you're going from $100 to $200, you have to achieve a 100% increase to hit "two-bagger" status. But to get to three-bagger status, you need to rise only another $100, to $300 -- just a 50% increase from $200.

From there, multiplying your money only gets faster and easier:

Dollar Amount

"Bagger"

Increase

$200

2

100%

$300

3

50%

$400

4

33%

$500

5

25%

$600

6

20%

$700

7

17%

$800

8

14%

$900

9

13%

$1,000

10

11%

Once you reach, say, a 20-bagger at $2,000, rising to a 21-bagger at $2,100 requires only a 5% increase. That's the same percentage that many stocks rise or fall in a single day. Here are just a few stocks that played in that percentage range on a recent day:

  • Sigma Designs (Nasdaq: SIGM  ) , down 16%.
  • US Airways (NYSE: LCC  ) , down 15%.
  • Tesoro (NYSE: TSO  ) , up 11%.
  • Cleveland-Cliffs (NYSE: CLF  ) , up 10%.
  • SunPower (Nasdaq: SPWR  ) , up 8%.
  • Rite Aid (NYSE: RAD  ) , up 6%.

It took me almost a year to double my money on this stock -- and with many stocks, it can take far longer. But each successive "bag" is easier and easier to achieve.

Rule Breakers specializes in finding stocks that achieve exactly this sort of amazing growth. Lead advisor and Fool co-founder David Gardner even coined a term, "daybagger," to describe a stock whose price rises more in a single day than you initially paid for it.

The big picture
Stay focused on the big picture for your investments. Aim to hang onto solid performers for a long time -- a decade or more, even -- as long as they're performing well. Great investors from Shelby Davis to Warren Buffett have created enormous wealth simply by holding their best investments.

And if you'd like some promising investment ideas that may eventually be daybaggers for you, I invite you to test-drive David's Rule Breakers service. There's no obligation to subscribe.

 This article was originally published Dec. 20, 2007. It has been updated.

Longtime Fool contributor Selena Maranjian owns shares of Intuitive Surgical. Sigma Designs and Intuitive Surgical are Motley Fool Rule Breakers recommendations. Sigma Designs is also a Motley Fool Hidden Gems Pay Dirt selection. The Motley Fool is Fools writing for Fools.


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