The Next Consumer Epidemic

If you've read Malcolm Gladwell's The Tipping Point, you're probably familiar with what it means for a product to stand on the cusp of being the next hot trend.

Gladwell calls out the 1995 surge in popularity of the Hush Puppy shoes produced by Wolverine Worldwide (NYSE:WWW) as an example. If you haven't read the book or don't remember Hush Puppies, you'll recognize that the same phenomenon occurred with DVD players, Teletubbies, and even the Big Mouth Billy Bass.

The interesting thing about all these products is not that they are singing fish or aliens with television-enabled digestive tracks (although that is somewhat fascinating) but that all these products existed for a long time before their improbable upswings.

Spot a product that just might tip
The theory behind The Tipping Point suggests that the quality and substance of a product is just part of the larger equation when evaluating any type of epidemic, consumer or otherwise. Other crucial aspects are the network or word-of-mouth capacity of key individuals within it, as well as an opportune environment for it to spread.

So how and why does this apply to investing?

Simple. As investors, you have the power to spot these products and producers long before Wall Street does. While consumer explosions don't occur everyday, they certainly take place often enough that a watchful person can make a pretty penny.

Starbucks and syphilis: More similar than you think
Gladwell's book is full of examples of tipping points. One recounts the confluence of factors that led the syphilis rate in Baltimore to spike in 1995. Syphilis was always there, mind you, but a few minor changes in the status quo caused enormous growth.

Now think of Starbucks (NASDAQ:SBUX). The first Starbucks opened in 1971. But it wasn't until Howard Schultz took control of the company and started selling fancy, portable coffee drinks to an increasingly busy American population that the Starbucks concept truly took off. Today, the company has more than 10,000 outlets around the world.

A tipping point right under your nose
Remember when only a few people had iPods? Today, more than 68 million iPods have been sold. But sales weren't always strong for Apple Computer (NASDAQ:AAPL). While the iPod was released in 2001, it wasn't until 2004 that we see a classic tipping point.

From the third quarter of 2004 to the first quarter of 2006, iPod sales numbers surged an incredible 1,533%. Gladwell would suggest that this spike wasn't just because the iPod was a handy and fun device but because -- much like a disease -- there was a combination of a few key people spreading it and a ripe environment in which to spread. Factors included the spread of high-speed Internet access, efforts by the music industry to stop illegal downloading, and the decision by record companies to make legal MP3s available online through Apple's iTunes.

Investors who were savvy enough to see the potential of the iPod earned greater than 450% gains during that same period. And there are plenty of retail explosions to note from the past few years. Just look at some of these companies whose stock values have exploded as a result of a consumer epidemic:

The next consumer explosion
And like all the other companies I've mentioned, these companies and their products existed long before their improbable upswings, only to delight shareholders with generous returns.

The best part is that these explosions are fully independent events. Just because you missed the boat on the iPod doesn't mean that another buying epidemic isn't right around the corner.

They happen all around us, all the time.

The Foolish bottom line
So get searching. Or let us help: With David Gardner's Rule Breakers investing service, you are partnered with an individual with a track record of predicting the rise of huge consumer trends.

David and his team will lead you through the flashes-in-the-pan like Betamax players and Rollerblades to the real trends in consumer buying, like recent Rule Breakers recommendation Under Armour (NYSE:UA). The NFL has bought into Under Armour, for instance, and the UA brand is emerging in the athletic apparel market. Much like the iPod, the rewards from being able to identify Rule Breakers early in their high-growth stages can be truly remarkable.

You can take a look at all of the stocks David has found that fit the profile for Motley Fool Rule Breakers subscribers by clicking here to try the service free, with no obligation, for 30 days.

Fool analyst Nick Kapur owns no shares of any of the stocks mentioned above. He also believed at one time that Rollerblading was going to be the dominant form of transportation in the future. Starbucks, Best Buy, and Dell are Stock Advisor recommendations. Dell is also an Inside Value recommendation. The Fool has a disclosure policy.