What stocks were the best performers over the past decade? Electronics innovator Apple (Nasdaq: AAPL ) put up a mighty fine 684%, and Berkshire Hathaway's (NYSE: BRK-A ) 112% return wasn't too shabby -- particularly when you compare it to the overall market's terrible returns.
But these two were nowhere near the top performers of the past 10 years. That list is made up of real rocket shots like Hansen Natural (Nasdaq: HANS ) -- which put up returns of more than 7,000% -- and XTO Energy (NYSE: XTO ) , which was up nearly 6,300%.
So what allowed the second duo to deliver such clobbering gains? A lot of things are likely in play, not the least of which are a good business and great execution. But the second two stocks also share something else important in common -- they're tiny and not very well known.
The fact that smaller stocks that haven't been discovered by Wall Street have a tendency to blow past their larger brethren is something that's well known by my fellow Fools -- particularly the team at Motley Fool Hidden Gems.
But where do we start if we want to find the stocks that will put up market-annihilating returns over the next 10 years? I've decided to turn to the 145,000-member Motley Fool CAPS community. Below, I've pulled up five stocks that have a market cap of less than $1 billion and have been highly rated by CAPS members.
|
Company
|
Market Cap
|
Projected Annual 5-Year Growth
|
CAPS Rating
(out of 5)
|
|
Oilsands Quest
|
$264 million
|
NA
|
*****
|
|
VAALCO Energy
|
$247 million
|
8%
|
*****
|
|
FormFactor (Nasdaq: FORM )
|
$821 million
|
NM
|
*****
|
|
Netgear (Nasdaq: NTGR )
|
$719 million
|
17.5%
|
*****
|
|
TASER International (Nasdaq: TASR )
|
$366 million
|
30%
|
****
|
Sources: CAPS and Yahoo! Finance. NA = not available. NM = not meaningful.
While these aren't meant to be formal recommendations, they could be a great place to kick off further research. In fact, let's go ahead and take a closer look at TASER International.
Don't tase me, bro!
OK, we all know about TASER's products and about some unfortunate incidents involving them and the use of maybe (a bit) too much force. But should we avoid this company like hot pepper spray?
While there may be mixed emotions about TASER's products, there seems to be a pretty clear advantage to law enforcement's being able to use such a nonlethal weapon to incapacitate villains rather than using something more dangerous or putting themselves at risk of injury. If law enforcement and security agencies within the U.S. -- or, better still, around the world -- continue to adopt TASER's products for widespread use, the company could definitely be in the early stages of significant growth.
In addition, an aspect of TASER's business model that jumped out at me is that the cartridges the devices fire are for a single use only, so as the number of users grows, so does the potential recurring revenue stream TASER could earn from the sales of new cartridges.
Of course, investors will need to see some big strides from the company to make an investment worthwhile. Based on expected earnings per share of $0.11 in 2010, TASER's stock currently trades at a lofty price-to-earnings ratio of 54. In addition, the company's history of top-line ups and downs and fitful profitability may serve to make future performance nausea-inducing for many investors. And that's not to mention that over the past five years the stock has fallen more than 50% on at least a few occasions.
But for those trying to get in ahead of the curve, the story for TASER is certainly there, and with a very strong balance sheet, this potentially electrifying company has a solid foundation to fund its growth.
On CAPS, more than 1,000 members have rated TASER's stock an outperformer, versus just 82 who think it will lag the rest of the market. Earlier this month, CAPS All-Star alars79 joined the bullish chorus:
Dominant player in the [Electronic Control Device] market. Solid cash position and no debt. Has had consistent revenues during the Great Recession. With continued terrorism fears, this type of weapon seems to make sense for on-board security personnel. Tase me bro!
Make your call
The CAPS community is all about getting everyone's opinion into the mix. So now it's your turn. Head over to CAPS and let the 145,000 members know what you think about TASER International or any of the other stocks listed above.
Want to read more about small companies that could make you an investing big shot? Check out Anand Chokkavelu's thoughts on the stocks that could be 2020's 10-baggers.
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