Since we most recently recommended a door manufacturer in Hidden Gems, let's stop to consider just how likely the door industry is to produce spectacular investment returns over the coming decades. And for that matter, past recommendations Saucony (Nasdaq: SCNYA ) (sneakers), Middleby (Nasdaq: MIDD ) (ovens), and Mine Safety (NYSE: MSA ) (mine safety equipment, natch) -- even if all of those recommendations are up over 100% since their newsletter debut, what long-term future could they possibly have?
To find our answer, consider the lessons learned from watching Backto the Future, Part II. In that movie, Biff goes back in time and gives his 1955 teenage self a sports almanac from 1985 that lists all the winning sports teams for the next 30 years. Armed with knowledge of the future and what to bet on, Biff gets rich.
But what if, instead of sports, the elder Biff had gone back in time to the 1950s with information about what the very best investments would be over the next 50 years? What secrets would he be whispering? Health care? Television? Communications? Plastics?
From The Future for Investors by Jeremy Siegel, which tracks results back to 1957, we get an answer: What you should have invested in to get really rich from 1957 to today were smokes, glass milk bottles, cans, second-rate soda, and unfashionable women's wear.
Assuming you reinvested dividends, kept spinoffs, and held onto the acquirer when an original company was bought out, here are the top five investments you could have made from the S&P 500 in 1957:
|Now Known As
(or part of)
|Accumulation of a $100 Investment, 1957 Through 2003|
|Philip Morris||Altria (NYSE: MO )||$462,640|
|National Can||Pechiney S.A.||$262,872|
|Dr. Pepper||Cadbury Schweppes (NYSE: CSG )||$239,222|
|Lane Bryant||Limited Brands (NYSE: LTD )||$199,787|
*Source: The Future for Investors
Other than the stultifyingly boring and non-revolutionary nature of what they were doing, one common thread is that, with the exception of Philip Morris, these companies were pretty small. They were among the smallest of the S&P 500 companies at a time when there were fewer publicly traded stocks.
So it makes more sense than you might think to look for the small, seemingly boring companies in out-of-favor industries. Check out every boring small-cap company recommended in Hidden Gems by taking a 30-day free trial. There's no obligation to subscribe.
Bill Barker owns none of the companies mentioned here. The Motley Fool is investors writing for investors.