The goal of our Motley Fool Rule Breakers newsletter advisory service is to find the great growth stocks of tomorrow a day early. We scour the public markets for disruptive technologies, first movers in emerging industries, forward-looking innovators, and . a social conscience.
Don't misunderstand: Our purpose is to pad our portfolios. But many Rule Breaking investment opportunities are also making the world a much better place. eBay (NASDAQ:EBAY) isn't generally thought of as a socially responsible company, but just imagine the amount of stuff that is recycled -- rather than thrown away -- because of eBay's service. With sales of more than $1 billion last year, the company likely saved us a landfill. The stock has also doubled over the past five years. If you own and support eBay, your portfolio and our environment thank you.
'Another Taser-less Death'
Last weekend, a 56-hour standoff with a homicide suspect ended without fatality or serious injury when police subdued the suspect with a stun gun. Hovering on a construction crane, the man was reaching for some water when police struck with a Taser (NASDAQ:TASR).
Taser may not immediately come to mind when you think of making the world a better place. The company has been attacked by the media, Amnesty International, and others who claim that stun guns can be unduly lethal. What these groups fail to recognize is that stunning an individual has a far less chance of ending fatally than shooting him with a bullet.
Data from police forces currently using Tasers confirms this fact. In 2003, The Arizona Republic reported that officer shootings in the Phoenix area dropped nearly 50% in the six months that Tasers were on the job. At the end of 2004, the Cape Coral, Fla., police department reported 83% fewer officer injuries and 40% fewer subject injuries following the widespread adoption of Tasers. Tasers also proved to be safer than batons, dogs, and pepper spray (based on Cape Coral's savings in injury-related costs).
On our Fool.com discussion boards, posters link to the latest article claiming that someone died after being Tasered. The members headline their posts, "Another Taser Death." Unfortunately, headlines like these are directing public opinion, even though they're often followed up by articles buried in the back pages exonerating Taser.
Since that's the case, I wrote the above headline to help us go beyond the headlines: "Another Taser-less Death." From now on, I want to see more articles about lives that could have been saved if every police officer in every city had a Taser on his or her belt.
Talk to police who use stun guns. Talk to the people in blue who resolve conflicts on a daily basis and sometimes put their own lives in jeopardy. An overwhelming number of them will tell you that this is the best development in the recent history of law enforcement. But in our litigious society, driven by lust for the lurid headline, Tasers have been given a bad name, while guns continue to take lives every day.
The market has punished Taser recently, but I think the company will be back. Its product is too good for society to ignore.
Invest and think globally
Worldstock, a growing division of online clearinghouse Overstock.com (NASDAQ:OSTK), was created in 2001 by CEO Patrick Byrne. It's a separate store within Overstock devoted to carrying the work of artisans from countries suffering from poverty, famine, or war. In other words, it's capitalism with a social agenda. The Worldstock mission is to be completely fair and transparent, with "razor-thin" margin pricing.
To date, Worldstock has been enacting real change. The company employs nearly 15,000 people worldwide, with 1,400 employees in Afghanistan alone. Economic success will be vital for that country's recovery, and Overstock.com is doing its part. It is already the largest private employer in Afghanistan -- 90% of employees are women -- and the largest exporter of Afghan crafts. By the end of this year, Overstock is hoping to become the largest private employer in three more countries: Ghana, Nepal, and Lebanon, the site of the recent Cedar Revolution that ended Syrian occupation.
In addition to opening markets that will drive the future global economy, Overstock.com is doing a small part to help spread freedom and prosperity. Both endeavors will pay off in the end.
The success of social responsibility
Whole Foods Market (NASDAQ:WFMI) has come a long way since its first store opened in Austin, Texas, in 1980. Just 25 years later, the once-tiny company with 19 workers now employs more than 32,000 individuals in 163 stores. The company continues to expand rapidly, with the goal of reaching $10 billion in sales by 2010.
Sensitive to criticism that expansion dilutes Whole Foods' character, Chairman and CEO John Mackey wrote in his 2004 letter to shareholders that Whole Foods has "proven that it doesn't matter how large we get as long as we stay true to our core values." Those core values include animal compassion, generating power from "green" sources, and supporting organic farming.
The company believes that expansion allows it to make even more of a difference. As a result, communities do not protest the construction of a new Whole Foods Market in their area, and the company rarely -- if ever -- receives negative press. Moreover, customers are willing to spend more at Whole Foods than they would at competing supermarkets in order to support these values. Whole Foods stock is up more than 125% since January 2003 and trades at a price-to-earnings ratio (P/E) of 50, far ahead of competitors such as Safeway (NYSE:SWY) or Albertson's (NYSE:ABS), which have P/Es of 14 and 16, respectively. The company's commitment to these causes made Whole Foods a Rule Breaker way back when, and good corporate citizenship makes the company all but untouchable as it grows.
The Foolish bottom line
Taser and Overstock.com are two companies we've recommended in Rule Breakers. I can't promise that every stock our service recommends will have business models as noble as those discussed above, or will be as philanthropic as Microsoft (NASDAQ:MSFT), which donates millions of dollars of software every year. I can, however, note that the most disruptive companies -- the ones that really take off and become a part of our culture -- are the companies that make our world better, safer, brighter. If you'd like to join us on our hunt for the products, businesses, and people that will define our future and your portfolio, test-drive Motley Fool Rule Breakers for 30 days -- for free. You'll receive two stock recommendations per month, and you'll have full access to all 18 of our picks to date. There is no obligation to subscribe. You have my word.
David Gardner is co-founder of The Motley Fool and lead analyst of the Rule Breakers newsletter service. David owns shares of Taser and Overstock.com. The Fool has a strictdisclosure policy.
