What Will You Regret Not Buying in 20 Years?

Feel like crying over missed opportunities? Check out the following returns for some stocks over the past two decades:

Company

Average annual return

Total return

Best Buy (NYSE: BBY  )

28%

13,360%

PotashCorp (NYSE: POT  )

25%*

8,330%*

Amgen (Nasdaq: AMGN  )

22%

5,220%

Applied Materials (Nasdaq: AMAT  )

19%

3,300%

Nike (NYSE: NKE  )

19%

3,160%

Colgate-Palmolive (NYSE: CL  )

16%

1,950%

Coca-Cola (NYSE: KO  )

12%

870%

Source: Yahoo! Finance. *Since Jan. 12, 1990.

A $5,000 investment in Colgate-Palmolive 20 years ago would be worth more than $100,000. The same investment in Best Buy would be worth nearly $700,000! Truly, one stock can change everything.

So, why didn't you buy them 20 years ago? Why aren't these amazing returns yours?

What stopped you?
There are lots of reasons you might not have bought these companies 20 years ago. Maybe you weren't yet awake to the promise of the stock market. (I know I wasn't.) Maybe you didn't have money to invest, even if you wanted to. But even if you wanted to invest and had the means to do so, you probably still didn't buy these companies for your portfolio. Why?

Well, with some of them you didn't expect them to keep generating strong returns. With others, though, you probably didn't see their promise -- because you weren't imagining a future very different from the present.

You weren't appreciating how ubiquitous semiconductors would be, and that many companies would generate huge profits from them. You weren't understanding that biotechnology companies would be developing exciting new drugs and treatments. You weren't imagining how certain retail chains would prosper by focusing on specific niches such as electronics, or that an athletic empire could be built around sneakers.

Yet these companies succeeded in large part because they changed the status quo and broke the rules about "how things are done" along the way.

And now -- when those innovations are apparent to even the dimmest of us -- those companies are household names. Their very ubiquity means they won't be maintaining those stratospheric growth rates going forward because now they're established. They may still serve your portfolio well, but they aren't likely to blow its doors off anymore.

Don't kick yourself
But even though these companies are well past their rule-breaking stage, there are a bunch of small, growing ones poised to do the same thing -- ones that are breaking the rules, moving first in exciting new arenas, and creating new ways of doing things. Some of them even stand a decent chance of delivering out-of-sight returns for you over the coming 20 years.

So, how can you tell the difference between the companies that will deliver those out-of-sight returns and companies that will sink, well, out of sight? Fool co-founder David Gardner looks for companies that offer "the highest possible returns" -- companies that are top dogs in important and emerging industries, and that have sustainable advantages, strong past price appreciation, good management, and more.

Take video games, for example, which, as an industry, has been experiencing explosive growth -- up 19% in 2008 and generating $21 billion. Both Activision Blizzard and Take-Two Interactive have been busy changing the rules of the game -- and setting new standards.

So, what will you regret not buying today?
David and his team have found, among many exciting companies, a specialist in surgical robots, a company that runs China's premier search engine, and one involved in commercial space systems. They each have some key traits in common with the powerful performers in the table above.

If you'd like to see what they're spotting today, I invite you to take advantage of a free 30-day trial of our Motley Fool Rule Breakers service, including full access to all past issues and every previous recommendation, many of which are in cutting-edge fields such as biotech, alternative energy, and nanotechnology. Click here to learn more.

So give it some thought -- you might want to park a little money in some rule-breaking companies that could serve you well for a long time.

This article was originally published on March 4, 2009. It has been updated.

Longtime Fool contributor Selena Maranjian owns shares of Amgen and Coca-Cola. Best Buy and Coca-Cola are Motley Fool Inside Value recommendations. Take-Two Interactive is a Motley Fool Rule Breakers recommendation. Activision Blizzard and Best Buy are Motley Fool Stock Advisor selections. The Fool owns shares of Best Buy. The Motley Fool is Fools writing for Fools.


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