4 Secrets of Million-Dollar Stocks

Stocks have turned thousands of investors just like you into millionaires. But how can you tell the companies that will make you rich from those that will just tread water for years -- or worse?

Given enough time, you don't have to find the perfect stock in order to build up an impressive portfolio. Although it's easy to forget after the big losses over the past year and a half, even broad market indexes have given investors strong returns over the long run -- solid returns that, when compounded over the years, can multiply your savings slowly but steadily.

Some investors, though, aren't that patient -- or want to shoot higher. Just look at what these top-tier stocks have done for their early investors:

Stock

Date Bought

To Have $1 Million Now, You Needed to Invest …

Microsoft (Nasdaq: MSFT  )

March 13, 1986

$4,413

Hansen Natural (Nasdaq: HANS  )

March 1, 1996

$2,227

Apple (Nasdaq: AAPL  )

Aug. 15, 1985

$15,442

Wal-Mart (NYSE: WMT  )

Sept. 21, 1972

$951

Dell (Nasdaq: DELL  )

Aug. 19, 1988

$9,045

Green Mountain Coffee Roasters (Nasdaq: GMCR  )

June 27, 1994

$17,603

Source: Yahoo! Finance. Prices reflective of March 27 close.

Sure, these stocks have extraordinary stories. But that's the point: You want to find the companies of tomorrow that will tell similar stories down the road. Here are three secrets to tracking down these millionaire-makers.

1. You've probably never heard of them.
With the benefit of hindsight, the stocks that have paid off the most for investors seem obvious. Whether it's a dominant computer operating system or a ubiquitous retail chain, you might kick yourself for having passed up the opportunity to buy shares early in those companies' histories.

But with most millionaire-making stocks, by the time you've heard of them, you've already missed out on some of their most dramatic gains. For instance, just a year after Microsoft went public, it had already nearly tripled from its IPO price.

So you can't afford to wait until mainstream media sources tell you about a hot stock. By then, it's too late -- and those who'll see modest investments turn to millions have already bought their shares.

2. You have to hold onto them.
Even once you find the stock that could make you a millionaire, your job is far from over. To realize the full potential of your investment, you have to stay the distance -- and overcome the temptation to take profits all along the way.

For many investors, holding onto a winner is a lot harder than you might think. Along the way, you'll have plenty of chances to sell out, having seen your original investment double, triple, or even multiply tenfold. Plenty of people felt like geniuses selling their winning stocks after big gains -- until they kept going higher for years after they sold out.

3. They don't last forever.
Still, although a buy-and-hold philosophy is crucial to milking a millionaire-making stock for all that it's worth, that doesn't mean a buy-and-hold-forever strategy will keep you rich. During the dot-com boom, plenty of brand-new millionaires failed to heed warning signs and implement simple strategies that could have preserved their newfound wealth for years to come. More recently, many failed to see that former highfliers like Washington Mutual and Citigroup (NYSE: C  ) would come crashing down.

Yes, it's hard to tell a temporary setback from a permanent slowing of a company's prospects. You'll make mistakes trying to balance your fear and greed. But after staying with a stock all the way up, you don't want to ride it all the way back down.

4. They're not for the meek.
Stocks that have the biggest growth potential also bear huge risks. For every company like Microsoft, there are hundreds of similar start-ups that never get off the ground and cost investors every penny of what they put in.

But obviously, you don't have to pick a whole stable of millionaire-makers to get rich. With modest initial investments, all it takes is one or two to set you for life.

Get help finding them
Looking for the leading stocks of tomorrow is what our Motley Fool Rule Breakers newsletter works on every day. From in-depth analysis in its monthly newsletter to ongoing coverage and special reports on top prospects, Rule Breakers goes the distance for you and has put together a market-beating track record over its history.

If you're curious to see more, then you're in luck. A 30-day trial is absolutely free and opens the door to everything Rule Breakers has to offer. And once you've discovered the secrets of millionaire-making stocks, you won't want to settle for anything less.

For more on becoming and staying a millionaire, read about:

Frustrated with your 401(k)? Even if your employer's plan isn't the greatest, you don't have to give up your dreams of a happy retirement.  Get the tips you need to turn your retirement savings around in our special report, "How to Make the Most of Your 401(k)" -- just click here for instant free access.

Fool contributor Dan Caplinger hopes to be a millionaire someday. He doesn't own shares of the companies mentioned in this article. Dell, Microsoft, and Wal-Mart are Motley Fool Inside Value recommendations. Green Mountain Coffee Roasters and Hansen Natural are Motley Fool Rule Breakers recommendations. Apple is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy is rich in information.


Read/Post Comments (3) | Recommend This Article (5)

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 March 30, 2009, at 4:42 PM, Bigt1622 wrote:

    It is very difficult to find such a stock. The microsoft people were lucky as can be but the ones who held it all the way up were just genius. I wish I could find one! Check out extrachange4life.com Pretty intresting website!

  • Report this Comment On March 31, 2009, at 2:04 AM, TMLonggun wrote:

    Lots of millionaire making stocks out there right now in the junior mining sector (eg GSPG.ob).

  • Report this Comment On March 31, 2009, at 4:29 PM, rruben wrote:

    I can't look into the future but I think Animas Resources Ltd. ( CVE:ANI ) is such a company.

    Also Apollo Gold Corporation looks like a penny stock with hudge potential in the long run, but the future will tell...

    On the other side, it's still risky to own them, but how much deeper can you sink?

Add your comment.

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: 863570, ~/Articles/ArticleHandler.aspx, 10/25/2014 10:18:31 PM

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 1 day ago Sponsored by:
DOW 16,805.41 127.51 0.76%
S&P 500 1,964.58 13.76 0.71%
NASD 4,483.72 30.92 0.69%

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

10/24/2014 4:00 PM
AAPL $105.22 Up +0.39 +0.37%
Apple CAPS Rating: ****
C $51.80 Up +0.39 +0.76%
Citigroup Inc CAPS Rating: ***
DELL.DL $0.00 Down +0.00 +0.00%
Dell CAPS Rating: *
GMCR $145.24 Up +1.24 +0.86%
Keurig Green Mount… CAPS Rating: **
MNST $97.89 Up +0.26 +0.27%
Monster Beverage CAPS Rating: ****
MSFT $46.13 Up +1.11 +2.47%
Microsoft CAPS Rating: ***
WMT $76.38 Up +0.13 +0.17%
Wal-Mart Stores CAPS Rating: ***

Advertisement