The Market's 10 Best Stocks

Source: Wikimedia Commons.

This article was updated on May 14, 2015.

Investors are always searching for the best possible stocks. That's because if you can identify a winning stock before it takes off, it can have a life-changing impact on your finances.

In order to find those stocks, though, it helps to know what you're looking for. Looking back at the past to find out what helped drive highly successful companies to lofty share-price heights can help reveal a lot about the attributes that are likely to define future stock market winners. And when you see the latest list of top-performing stocks from the past decade, you'll quickly notice some things that nearly all of them have in common.

The best of the best
With that in mind, let's cut to the chase and reveal the market's 10 best stocks over the past 10 years:

Source: S&P Capital IQ. Includes only stocks listed on major U.S. exchanges with verifiable stock price histories and substantial volume throughout the period.

Perhaps the most interesting thing about this list is how many of the companies we've seen before on similar looks back in past years. Regeneron has been a darling in the booming biotechnology sector for years. Monster Beverage was formerly known as Hansen Natural, but the energy-drink giant has continued in its efforts to be an innovator in the beverage business.

Green Mountain has added the name of its popular Keurig single-serve brewing machine to its corporate moniker, but its returns have only accelerated in recent years. NewMarket appeared on the 2012 list, and it continues to drive growth with its focus on petroleum additives to boost power and efficiency.

Yet the thing that really stands out among these 10 companies is that every single one of these stocks had a market capitalization of less than $1 billion a decade ago. You have to go down to No. 12 on this list to find behemoth Apple (AAPL 0.69%) as an exception to this general rule. What investors can learn from that is that if you expect to get truly life-changing returns from stocks, you can't expect to find them in the biggest, most prominent and well-known companies in the market. Instead, you have to dig deeper and take a look at parts of the market that many Wall Street analysts leave untouched -- small companies that often take some digging just to find out what they actually do, let alone what their potential is for future growth.

Source: Regeneron Pharmaceuticals.

In addition, you can easily see the impact of large-scale industry trends by looking at successful stocks of the recent past. Biotechnology stocks are well represented on the list, with Regeneron, Medivation, and Illumina all posting impressive gains. Each of these companies can point to its own individual success stories, including Regeneron's macular degeneration drug Eylea, Medivation's prostate-cancer treatment Xtandi, and Illumina's groundbreaking work on genetic sequencing. But they're also representative of a larger trend throughout the biotech sector that has enabled many astute investors to cash in on the favorable results there.

Source: Apple.

Finally, one last lesson you can learn from looking at several of these stocks is: Once you find a winner, don't be in a hurry to let it go. Countless numbers of investors have sold off their holdings in Apple during the years, convinced that it had no more room to rise after its huge gains. Yet the company has defied expectations, continuing to cash in on its product lineup while coming out with new and innovative products that hold the promise of even more blockbusters ahead. Similarly, Priceline has long established itself as the dominant online travel portal in the industry, but it continues to fight for market share and keeps extending its reach across the globe in search of new growth opportunities.

Great investors never stop looking for the top stocks of tomorrow. But they also know where to look to have the best chance of spotting future winners. By focusing on the stocks that most investors never even look at, you'll boost your odds of buying the stock that tops this list in 2024.