The Greatest Stock Story Ever Told

Can you spot a winner? I can. Not every time, but often enough. I call it my special purpose.

But can it make you rich?
Sure. Imagine you paid that guy Hiro from Heroes to bend time and space for you. You could whisk back to July 1995 and buy Dell. If you take along $1,000, you've got $39,000 in 10 years.

While you're there, grab a hatful of Cisco -- and watch it morph $1,000 into $6,000.

You're probably wondering: If you could bend time and space, would you really invest only $1,000? Well, that's what you should be wondering. What you're really wondering is whether I'm simply pulling these stocks out of my hat. Well, I'm not. I'll even show you a table to prove it.

That's right, I said a table
In fact, I heard about both stocks (and the others you're about to see) one sunny day in 1995. And those stories made perfect sense to me at the time. Remember, we're not talking 1989 here.

Most every business we'll discuss today was proven by 1995. They were industry leaders ... they were run by zealots ... they essentially printed cash ... and insiders loved them.

Best of all, they were only modestly huge at the time, which made them attractive to institutions, yet left them room to run. Only one thing could have made them better, as you'll soon see. But first, it's time I revealed my source and showed you that table.

I won't keep you hanging
A fellow named Tom Gardner hipped me to those stocks in 1995, plus the others in the table below. Tom's a founder of The Motley Fool. He's also bald and tells decent stories. In 1995, he got it into his bald head to build a portfolio we could hold for 10 years.

Here's how we fared ...

Company

7/7/95

7/5/05

Return

Sun Microsystems (Nasdaq: JAVA  )

$1.59

$3.64

129%

Intel (Nasdaq: INTC  )

$8.04

$25.98

223%

Microsoft (Nasdaq: MSFT  )

$5.16

$24.48

374%

Hewlett-Packard (NYSE: HPQ  )

$13.62

$23.36

72%

There were 10 stocks in all. After 10 years, we were up 667% (versus 147% for the S&P 500) -- turning $10,000 into some $77,000.

But you could have done better
Of course, you'd have to go further back in time -- when these companies were smaller. If you'd bought Dell in 1991, for instance, you'd have ended up with four times as much. Same with Cisco. Clearly, great stocks like these get greater when you get in early.

That's why conglomerates like General Electric (NYSE: GE  ) or even mega-cap techs like Yahoo! (Nasdaq: YHOO  ) didn't make Tim Hanson's list of the market's 10 best stocks. But opportunistic biotech Celgene (Nasdaq: CELG  ) did -- it popped 6,100% in 10 years.

That's also why Tom Gardner focuses on small companies when recommending stocks to his Motley Fool Hidden Gems subscribers. It may even be why more than 20 of his team's picks have at least doubled since 2003 and why his entire portfolio is up 61.2%, nearly twice the broader market's 25.5% return.

Of course, I don't know that for certain
But I do know this: Your chances of catching a 6,100% gainer like Celgene skyrocket when you buy them small. You just need to know a good story when you hear one. Or hear better stories. That's why you should meet Tom G.

Especially now that you can try his complete Hidden Gems service for free. There's no pressure to join, and you get four full years of great stories, including Tom's top five picks for new money right now. Best of all, you get a whole month to mull it over. To learn more, click here.

This article was originally published on Dec. 5, 2006. It has been updated.

Paul Elliott doesn't own any of the stocks mentioned. Dell and Yahoo! are Motley Fool Stock Advisor recommendations. Dell, Microsoft, and Intel are Inside Value picks. You can check out the entire Hidden Gems scorecard with your free trial. The Motley Fool has a disclosure policy.


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  • Report this Comment On October 29, 2007, at 11:07 PM, AtlasBear wrote:

    Mr. Elliott glossed over a pertinent fact with Microsoft, to wit, that it went through at least three 2-for-1 splits in the time period he described. Hence, instead of a $24.48 price, a split-adjusted price for that original investment would be $195.84 per share, a 2992% return even after the dot com collapse.

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