Hindsight is 20/20, or, as Warren Buffett once said, "In the business world, the rearview mirror is always clearer than the windshield." These words offer cautionary advice against dwelling in the past, but they also highlight a clarity that can be gained in retrospect. Studying the road not taken won't allow you to predict the future, but it can yield some valuable insights.
As the year draws to a close, and the pain of missed opportunities weighs against the promise of a new year, we asked five Motley Fool contributors to spotlight a 2015 buy that got away. Read on to learn which companies they would snatch up if given the chance to start 2015 anew.
Brian Stoffel (Ctrip.com): I have been following Ctrip.com (NASDAQ:CTRP)-- China's leading online travel agency (OTA) -- for two years. After researching the company, evaluating its position in the industry, and listening to how CEO and co-founder James Liang planned to run the business for the long run, I bought shares.
That was back in September 2014, when the stock traded for a split-adjusted $30. Since then, the stock has shot up 65%. Of course, hindsight is always 20/20, so it's easy to say, "I wish I would've bought more."
But in this case, it's a little different. You see, I cover Ctrip's earnings releases for The Motley Fool, so I'm intimately aware of how the company's doing. Liang warned last year that the pricing war among China OTAs -- including eLong, and Baidu-backed Qunar -- would continue for some time. He said Ctrip would prioritize market-share gains over profitability.
But then, the company defied these expectations and produced compelling results. In March I pointed out that the race to the bottom might be over for China OTAs -- as profitability was much better than expected. But I didn't buy. If I had, I'd be looking at an 80% gain.
Then, in May, I pointed out that the company was winning the mobile travel wars in China, as the company's app had reached 800 million downloads, and 70% of transactions were being processed on mobile devices. But I didn't buy. If I had, I'd be looking at a 40% gain.
By not taking action in those two instances, I missed the huge mover: a tie-up between Baidu, Qunar, and Ctrip that solidified the company's position at the top of China's OTA pyramid, and reduced pricing pressures. When the deal was announced, the stock popped 22%. But I missed it all because I passed up my opportunities
Tamara Walsh (Amazon): Critics love to complain about Amazon's (NASDAQ:AMZN) profitability or lack there of, but the truth is that the e-commerce giant's stock continues to outperform despite near-term shortcomings. Shares of Amazon are up a jaw-dropping 114% year-to-date as of Dec. 22. This puts Amazon in the No. 2 spot for best-performing stock in the S&P 500 for the year. Moreover, Amazon's stock has grown in value from $308 per share where it started the year to where it trades today at around $660 per share.
The company boasts what are estimated to be tens of millions of Amazon Prime members and hundreds of millions of global users. This affords Amazon a cushion that will protect it from rivals for many years to come. The popularity of Amazon branded products such as its Kindle and Fire TV devices is also attracting new and more loyal customers to Amazon's kingdom.
In fact, Amazon celebrated its best ever holiday sales turnout this year during Black Friday weekend. The company sold three times as many Amazon-branded devices as it did last year, with its Fire TV earning the title of "#1 streaming media player in the U.S.," according to a company press release. Given these results, it seems most investors are willing to ignore break-even operating margins in favor of Amazon's longer-term growth prospects.
With the stock trading at more than double where it started 2015, Amazon is one stock I wish I'd bought at the start of the year.
Rich Duprey (McDonald's): I've spent a good part of the past year castigating McDonald's (NYSE:MCD) management for its decision to become, in the words of CEO Steve Easterbrook, "a modern, progressive burger company." But while I was busy knocking the business, the market was running its shares higher.
Not that my critique was without basis, mind you. Easterbrook has been dead set on pursuing millennial consumers that, in my opinion, won't be returning to McDonald's any time soon, or at last not in large enough numbers to move the needle, and not without risking alienating its core customer.
The primary customer eating at McDonald's is looking for a good, quick meal at a good, cheap price. He's not interested in kale bowls, ciabatta buns, or "artisan" anything. While the sirloin steak burgers might develop a following, not at five times the cost of what he can pick up off the value menu.
But after all of these quixotic pursuits, Easterbrook has finally begun to hone in on the things that matter to the mass of consumers that can make a difference. He's introduced all-day breakfast; he's improving the speed of the drive-thru windows that account for the vast bulk of its revenues; and he's finally introducing menu items for the dollar menu.
While it perhaps should have been apparent he'd get around to fixing the basics, because these are basics aimed at its moneymakers, they should have been addressed first. Then he could've tried wooing back millennials. It wasn't clear to me he had his priorities straight.
While McDonald's shares traded in a fairly constant range in the mid- to high-$90's for most of the year, the introduction of being able to get McMuffins and hash browns anytime of the day convinced the market things were different and they've bid the stock up some 25% since September when it made the announcement.
Other investors were smarter than I was in seeing the burger chain would right itself. Had I not been so rigid, I might have seen that McDonald's was ready to turn a corner and gotten in earlier.
Beth McKenna (American Woodmark): American Woodmark (NASDAQ:AMWD) would have been a great stock to buy at the beginning of 2015, as it's up 110% year to date. The Winchester, Va.-based company, which sports a market cap of $1.3 billion, manufactures and distributes kitchen cabinets and bathroom vanities for the new home and remodeling segments through home centers, builders, and dealers in the United States.
American Woodmark has been benefiting this year from macroeconomic factors, namely housing starts trending up and oil prices plummeting, the latter of which leaves more money in consumers' pockets for discretionary spending. The company has also been executing well, continuing to leave analysts' estimates in the (wood) dust. In its most recent quarter, revenue grew 18%, while earnings per share jumped 129%, considerably higher than the 65% increase that Wall Street was forecasting.
The company has also been making some smart moves, such as starting a custom cabinetry line several years ago. While this line only accounts for about 10% of American Woodmark's overall revenue, it's growing faster than the company's core stock cabinetry lines, largely because in recent years builders are primarily constructing upper-end new homes. Since this line sports a higher margin, its robust growth is helping to expand American Woodmark's overall margin. Gross profit margin was 21.9% in its most recently reported quarter, up from last year's 17.2%.
American Woodmark is having a terrific 2015 and the near-term horizon looks bright. So, it's a stock worth further exploring. However, I'd caution investors to keep in mind that it's a cyclical stock, so its fortunes will likely heavily rise and fall with the general U.S. economy, and more particularly with new housing starts.
Keith Noonan (Netflix): Heading into 2015, I suspected that it might be a bit too late to join the Netflix (NASDAQ:NFLX) party. From 2009 to the end of 2014, Netflix stock gained more than 1,000%, and it kicked off 2015 with a trailing-12-month P/E value of nearly 80. The streaming video leader had impressive growth prospects thanks to momentum in international markets and strength in original content, but a lofty valuation and the possibility of increased competitive pressures led me to think that better buys could be found elsewhere. Given the opportunity to travel back in time, I'd have to make some adjustments to that thesis.
Netflix stock has gained roughly 140% in 2015, placing it as the year's single biggest gainer on the S&P 500, however the bigger story might be the company's progress in an area that's going to help it keep winning for years to come: brand strength. Take a moment to ponder "Netflix and chill," a risque Internet meme popular among millennials.
So, while a Netflix retrospective could wrap up with a litany of impressive stats, and there are plenty, my core takeaway from missing out on the stock's 2015 festivities is a simple one: Be on the lookout for the less immediately quantifiable benefits that can stem from great products.