The Best-Performing Large Caps of 2006

When it comes to achieving triple-digit returns over a period of a year or more, most investors would probably think of small-cap companies. The following table, however, reveals that many larger companies were able to deliver returns of that magnitude in 2006.

What insights can we gain from taking a closer look at this group?

Three takeaways
First, it's clear that these are relatively obscure companies. Well-known outperformers such as General Electric (NYSE:GE) and ExxonMobil (NYSE:XOM), which achieved returns of 7% and 38%, respectively, over this period, did not make the list.

Second, many of these companies were somewhat small by large-cap standards. Some of them, like First Marblehead and Agnico-Eagle Mines, would have been considered small companies at the beginning of the year. And only China Life Insurance has a market cap greater than $50 billion, a neighborhood that includes the likes of Dell (NASDAQ:DELL) ($55 billion) and Apple (NASDAQ:AAPL) ($72 billion).

Finally, eight of the 15 companies were foreign. If you were looking for outsized returns in 2006, you'd have been wise to fish in international waters.

That last point should not be surprising. Bill Mann, analyst of our Global Gains international investing service, has noted that companies domiciled outside of the United States account for 51% of the total world market capitalization. Quite simply, investors substantially improve their odds of finding great companies when they widen the playing field to include international stocks.

And there's an added bonus as well. Through the magic of diversification, investors will actually lower their overall risk by adding international stocks to their portfolios.

Expand your horizons
Investing in foreign stocks does present a number of challenges, however. Many of these companies are obscure. Honestly, how many of the foreign companies listed above had you heard of before? And many international companies operate within relatively complex regulatory environments. Reading the relevant financial statements can often pose a challenge for even the most sophisticated of investors. So tread extra-carefully.

That's why we've developed Global Gains, our first investment service devoted solely to seeking out the best international investments. International investing requires more due diligence than domestic investing, so we've put together a team of analysts to navigate these tricky waters.

If you'd like to get your feet wet in international investing, or to see the team's international stock picks, you can preview Global Gains free of charge for 30 days. With one click, you can expand your investing universe by 51%.

John Reeves does not own shares in any of the companies mentioned in this article. He is currently ranked 1,313 out of 18,736 in Motley Fool CAPS. He thinks that's good, but recognizes that being 1,313th at anything is nothing to brag about. Dell is an Inside Value and Stock Advisor recommendation. Akamai is a Rule Breakers recommendation. First Marblehead is a Hidden Gems recommendation. The Fool has a disclosure policy.