Editor's note: The prior version of this article incorrectly implied that Craigslist is run like a nonprofit organization. According to CEO Jim Buckmaster, Craigslist is, in fact, a for-profit business. The ambiguities are resolved in this version of the article. We regret the error.
Our Motley Fool Rule Breakers service recently created an ambitious watch list of approximately 250 attractively positioned growth companies. All carry the promise of extraordinary growth -- both for the company itself and for your portfolio. (You can view the list with a free trial to the service.)
Who's watching the watch list?
Some companies in our Universe have passed all of our screens and are now official recommendations. Others are still private entities not yet available for investment. But the majority of the companies are trying to position themselves to achieve the astounding growth and success that has enriched owners of Amazon.com, Time Warner's AOL, and eBay (NASDAQ:EBAY).
With experts in biotech, nanotech, and early adopters, our team adds promising companies and boots duds from the Universe every month. And we're not alone in the venture; thousands of Rule Breakers community members are building out the watch list with companies they are watching, following, or, in some cases, already own.
October brings us autumn leaves, the baseball playoffs, and another crop of excellent stock ideas from our Rule Breakers subscribers.
Breaking the rules of storage and sleeping?
Subscriber VonKarl suggested PODS, a locally oriented, privately owned portable storage service, which led us to an even better offering in the same industry: Mobile Mini (NASDAQ:MINI). As the largest business in a fragmented industry, Mobile Mini may well develop the clout and finance to buy up the local and privately owned competitors -- which it will need to do to truly dominate the market. Portable storage is not exactly a Rule Breaking industry, but the company that comes to dominate it might be. We're keeping our eyes on Mini and its very healthy 36% operating margin.
Tempur-Pedic (NYSE:TPX), brought to our attention by a subscriber who goes by the handle ennui, merits a promotion to our watch list. Tempur-Pedic makes pillows and mattresses out of "memory foam" -- the foam that remembers how you like to lie while you are peacefully dreaming about your Rule Breaking investments. The terms "bedding" and "Rule Breaking industry" don't seem like natural bedfellows, but this revolutionary material could propel Tempur-Pedic into being a Rule Breaking first mover.
The world of the Web
Internet-based firms Wikimedia and Craigslist join our watch list this month. Both have grown primarily from word-of-mouth buzz, making their growth stories all the more impressive.
Nonprofit Wikimedia is the parent of Wikipedia, the site where discerning Internet users go when they want the lowdown on how something works or what something actually means. But it is more than your typical encyclopedia, simply providing a dry, wordy explanation. Wikipedia provides the meat, the bones, and the muscle for any product or word you can think of. The sheer beauty of linking from page to page for the reader makes exploring the subject easy.
Wikipedia is fast becoming the standard for online encyclopedias, just as Google (NASDAQ:GOOG) became the de facto search engine of choice, and it's the main competitor to GuruNet's (NASDAQ:ANSW) answers.com site. If you don't already use it, I recommend you check it out. Although it is a nonprofit, it's still a story worth watching -- the reason we're placing it in our Universe.
Craigslist may well become one of the most successful Internet sites of all. Set up by namesake Craig Newmark in the very early days of the Internet as a community service in San Francisco, the company is now recognized as the premier site for classified advertising throughout the United States (and, increasingly, the world). It's a formidable foe to publicly traded companies such as Monster (NASDAQ:MNST) and Tribune (NYSE:TRB) in classified advertising. Former Rule Breaker and current competitor eBay bought a 25% stake in the company last year, hoping to seize some of Craigslist's potential.
Newmark eschews the use of paid advertisements on the website -- the company's revenue comes from businesses that pay to post job openings in the San Francisco, New York, and Los Angeles markets. Although Craigslist operates as a for-profit entity, the firm also set up the Craigslist Foundation, a 501(c)3 nonprofit organization, to fund philanthropy.
According to Craigslist, it is "trying to provide a trustworthy, efficient, relatively non-commercial place for folks to find all the basics in their local area." That's not necessarily good for us as stock investors, but it's a Rule Breaking innovation that is changing the way people use the Internet. And for that, it merits a place on our list -- even though we'll likely never make a cent from it.
Foolish final thoughts
So there you have it: four companies that thousands of informed eyes are now watching. Next month, the Universe will expand and evolve. If you want to keep tabs on these minnows as some grow into monsters, we're offering a free 30-day trial to Rule Breakers. You'll have access to every official recommendation we've ever made (and our picks are beating the S&P 500 by more than 12 percentage points), special reports, the Rule Breaker Universe, and our dedicated discussion boards, where thousands of investors share ideas and analysis. Click here to learn more.
Carl Wherrett is the resident Rule Breakers nanotechnology guru. He does not own any shares of any company mentioned in this article. Amazon.com, eBay, and Time Warner are Motley Fool Stock Advisor recommendations. The Motley Fool has adisclosure policy.
