What Will You Regret Not Buying in 20 Years?

Feel like crying over missed opportunities? Check out the following returns for a handful of notable stocks over the past two decades:

Company

Average annual return

Cisco Systems (Nasdaq: CSCO  )

33%

Adobe (Nasdaq: ADBE  )

15%

Oracle (Nasdaq: ORCL  )

22%

Home Depot (NYSE: HD  )

15%

Harley-Davidson (NYSE: HOG  )

17%

Wal-Mart

13%

S&P 500

6%

Source: Yahoo! Finance.

A $5,000 investment in Oracle 20 years ago would be worth more than $265,000 today. The same investment in Cisco Systems would be worth more than $1.5 million! Truly, one stock can change everything -- even in a recession.

So why didn't you buy these stocks 20 years ago? (Or even 15 years ago -- it's rarely too late to buy a stock that's still a strong grower.) Why aren't these amazing returns yours? Why isn't your portfolio home to a few millionaire-maker stocks?

What stopped you?
Maybe you weren't yet awakened 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?

Perhaps you didn't expect some of them to keep generating strong returns. Perhaps you didn't see the promise of others, because you weren't imagining a future very different from the present.

You didn't imagine that a motorcycle manufacturer would grow to transcend all its peers, producing vehicles seen much more as icons than commodities. You didn't think that consumers and businesses would embrace stand-alone retailers focused solely on home improvement and construction. You didn't appreciate how critical databases and their maintenance would become for American businesses.

Many of these companies succeeded largely because they changed the status quo, breaking the rules about "how things are done" along the way.

Now, when such 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. They may still serve your portfolio well, but they aren't likely to blow its doors off anymore.

Don't kick yourself
Even though these companies are well past their rule-breaking stage, there are a bunch of small, growing up-and-comers poised to do the same thing. These businesses are breaking the rules, moving first in exciting new arenas, and creating new ways of doing things. Some might even deliver out-of-sight returns for you over the coming 20 years. True, it can take guts to invest in them -- but the rewards may be worth the risk.

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

Take videogaming, for example. The industry has enjoyed impressive growth, up 19% in 2008 and generating $21 billion in revenue, though that figure slipped a little during 2009's recession. Still, many gaming companies have seen their sales soar. Both Activision Blizzard (Nasdaq: ATVI  ) and Take-Two Interactive (Nasdaq: TTWO  ) are busily changing the rules of the game -- and setting new standards.

What will you regret not buying today?
Among many other exciting companies, David and his team have found a specialist in surgical robots, a company that runs China's premier search engine, and a business involved in commercial space systems. Each of these contenders has some key traits in common with the powerful performers in the table above.

If you'd like to see what David and his team are spotting today, I invite you to take advantage of a free 30-day trial of our Motley Fool Rule Breakers service. You'll get 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.

Give it some thought. You might want to park a little money in some of "the greatest growth stocks of the next generation."

Already a member of Rule Breakers? Log in at the top of this page.

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

Longtime Fool contributor Selena Maranjian owns shares of Activision Blizzard, Wal-Mart, and Home Depot. The Home Depot and Wal-Mart Stores are Motley Fool Inside Value picks. Take-Two Interactive Software is a Motley Fool Rule Breakers recommendation. Adobe Systems and Activision Blizzard are Motley Fool Stock Advisor choices. Motley Fool Options has recommended a synthetic long position on Activision Blizzard. The Fool owns shares of Activision Blizzard and Oracle. The Motley Fool is Fools writing for Fools.


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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 05, 2010, at 12:51 PM, tungwaiyip wrote:

    Maybe you're fooling us by picking the winners. S&P has an average growth of only 6%. For every Cisco that deliver 33% growth, there are a bunch of dudes that does not perform or even lose value over 20 years.

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