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Stocks With Room to Run

Todd Wenning
February 23, 2009

The "Rule of 72" is a great way to calculate compounding interest in your head. To find the number of years it would take a figure to double, simply divide the number 72 by the assumed growth rate. For example, if you think your stock will grow at a rate of 7.2% per year, it will take roughly 10 years for it to double (72 / 7.2 = 10).

If that 7.2% long-term equity growth rate seems too slow, consider that the Vanguard Total Bond Market Index (VBMFX) returned about 5.4% per year on average over the past 10 years, while the S&P 500 has had an annualized return of negative 3.1% over that same time period.

It's been a disappointing decade, to be sure, and many notable companies not only underperformed the bond market, but also posted negative 10-year returns.

Of the 500 companies currently in the S&P 500, 187 -- about 37% -- have failed to break even since February 1999. Some of those dreary investments include:


Trailing 10-Year Annualized Return

Capital One (NYSE: COF  )


International Paper (NYSE: IP  )


Dow Chemical (NYSE: DOW  )


Aflac (NYSE: AFL  )


Makes you want to take a closer look at your index fund, doesn't it?

Lean on me
The good news? For each of the aforementioned underperforming large caps, others have been holding down the fort over the past decade. Without these companies, the S&P 500 may have fared even worse than it did. This list includes:


Trailing 10-Year Annualized Return

Freeport McMoRan (NYSE: FCX  )


National Oilwell Varco (NYSE: NOV  )


Burlington Northern Santa Fe (NYSE: BNI  )