Have you ever held an investment that turned into a 10-bagger? That is to say, have you ever bought a stock that grew to a value 10 times bigger than your initial purchase price? They're not as uncommon as you might think. The key is simply identifying companies with explosive long-term growth potential, buying that stock, and then just leaving it alone for long enough to let them fully bloom.
With that as the backdrop, see if you can spot the common elements among three different stocks that each eventually dished out a 900% return, and then some.
1. Tractor Supply
Tractor Supply (TSCO 1.87%) has been in business since 1938, but it didn't become a publicly traded entity until 1994. But even after the IPO, the bulk of the stock's gain didn't begin materializing until 2009 and the end of the Great Recession. Since that year's low (which marked the end of the bear market prompted by the subprime mortgage meltdown), shares of Tractor Supply have risen from a split-adjusted price of less than $8 to their current price of around $198. In March, shares were trading above $240. That's a 2,375% return in about 13 years (if you're keeping score).
The growth driver, of course, was a seismic shift among consumers back toward self-sufficiency, and simply doing more things for yourself with your own hands. Fueled by a booming economy through the 1990s and early 2000s, consumers grew accustomed to buying rather than growing. When all of the era's excesses -- including heavily processed foods and chemically powered growing -- fell out of favor, consumers began to fall back in love with the idea of small-time home gardening. Last year, this crowd gave the retailer $12.7 billion worth of business, versus only $4.2 billion just 10 years earlier.
Founded back in 1993, Nvidia (NVDA 0.35%) was plugging into the personal computer craze at the perfect time. It experienced tremendous growth right out of the gate, too, yet even when it went public in 1999 there was still so much more growth ahead of it. This growth would end up being perpetual, in fact.
Nvidia makes graphics processors needed by video gamers, computer-based designers, and digital animators. As long as computers continue to improve and software becomes more complicated, the need for more powerful graphics cards never really goes away. That's why Nvidia's stock is up more than 4,820% over the past 10 years, and higher to the tune of 37,070% since its IPO. Making this feat even more impressive is the fact that most of the growth has taken shape just since 2015, and the numbers are still huge despite the stock price halving compared to its late November high.
The future still looks bright too, although not necessarily for the same reason Nvidia's past does. While it's still making go-to tech for video gamers, the same graphics-processing technology that makes powerful video cards is also perfectly suited for handling artificial intelligence applications. Nvidia is of course leveraging this nuance by designing and building AI systems from the ground up.
And that's a big deal. Precedence Research estimates the global artificial intelligence market will grow at an annualized pace of 38% through 2030, when it should become a $1.6 trillion market that Nvidia is well positioned to address.
3. Monster Beverage
Finally, add Monster Beverage (MNST 0.33%) to your list of stocks that have dished out surprisingly big gains. A $1,000 investment made in this company back at the start of 2011 would be worth right around $10,000 now, while stepping into it 20 years ago would leave you with a whopping 111,678% return.
Very few people are sitting on that degree of gain, of course. Back in July 2002, not only were we smack-dab in the middle of a recession, but this company's shares (when it was still just a soda company called Hansen) had effectively gone nowhere after nearly two decades. There just weren't a lot of people interested in owning a beverage maker that seemed to be struggling to really break into the market at that time.
Then everything changed. Hansen launched its first energy drinks using the Monster moniker back in 2002, and though it took a couple of years for them to catch on, once they did there was no looking back. By 2012 the energy drink category had become so big for the company that it changed its name to Monster Beverage, and now does on the order of $6 billion worth of business per year.
Connecting the dots
Did you recognize the common threads among these three names? They're not exactly easy to ferret out, but in all three cases, this huge growth reflects the advent of a new cultural norm. Consumers are not only looking to steer clear of foods that may have been exposed to pesticides and other chemicals, but they also enjoy home gardening as a hobby and pastime. Many consumers still appreciate the energy surge sugar provided, but they need the caffeine jolt that only energy drinks can offer. As for Nvidia, video gaming is a perpetual growth market as well, since expectations for the best-possible graphics never wanes. Artificial intelligence should follow that same path.
It's not blatantly obvious which companies are just now tapping into new cultural norms; it's not even obvious what today's new norms are. If you look closely and think carefully, though, you can identify several 10-bagger prospects. Just be sure to leave them alone long enough to do their thing once you wade in and buy the stock.