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One Great Stock

Tom Gardner
January 2, 2008

I suspect that you clicked this article promising one great stock because you want to grow your investment portfolio. You want to make money and learn more about the markets. And since you clicked on a Motley Fool article, you probably want to have fun, too.

Make money. Get smarter. Have fun.

That's how Warren Buffett has spent his professional life. Same with Peter Lynch and J. Paul Getty and Bernard Baruch. These investors made millions -- literally tens or hundreds of millions of dollars -- by seeking profit, pursuing mastery, and loving investing for life.

There is no natural or preternatural law that says you can't do the same. And the fastest route there is to understand how companies achieve competitive greatness. What are the commercial features that help their stocks rise 10, 200, or 5,000 times in value? Here are three of my favorites.

Three principles of commercial greatness
1. Replication.
The very best public companies have a replication model that drives growth indefinitely. Consider five-year market-beating chains such as Sonic (Nasdaq: SONC  ) , BJ's Restaurants (Nasdaq: BJRI  ) , and GameStop (NYSE: GME  ) . Or think about how Starbucks has expanded from 1,000 storefronts in 1996 to more than 14,000 today. Simple replication has helped Starbucks become a $15 billion business and one of the best-known U.S. brands.

2. Residence. When was the last time you took a rental car through the car wash? Which have you treated better -- the home you own today, or your sophomore-year dorm room? We take better care of what we own than what we rent. The same holds true in Corporate America. Some of the greatest companies -- (Nasdaq: AMZN  ) , Si