The greatest stocks of the past decade are not the ones you'd expect. Microsoft isn't on the list. And Starbucks doesn't crack the top 50. I wouldn't have been able to name any of the top 10 on the spot. Which just goes to show, we probably haven't even heard of the best 10 stocks of the next 10 years. But I'm getting ahead of myself.
Without further ado, the 10 top performers:
|
Company |
Current Market Cap* |
Return 1996-2005 |
|---|---|---|
|
Hansen Natural |
$1,990 |
24,185% |
|
Chico's |
$8,000 |
17,600% |
|
NVR |
$4,660 |
7,150% |
|
Christopher & Banks |
$717 |
6,795% |
|
Meritage Homes |
$1,640 |
5,860% |
|
American Eagle Outfitters |
$4,040 |
4,850% |
|
Comtech Telecommunications |
$718 |
4,315% |
|
SCP Pool |
$2,090 |
4,090% |
|
Engineered Support Systems** |
N/A |
3,800% |
|
Jos. A. Bank |
$704 |
3,790% |
|
Total Average Return |
8,240% |
**Engineered Support Systems was recently acquired by DRS Technologies.
Historical price data provided by Capital IQ.
There are more than a few things that are shocking about this list. First, these companies are obscure. Hansen Natural -- the greatest stock of the past decade -- has sold all-natural juices and sodas since the 1930s. Chico's sells clothes to women in their 30s, and 10 years ago it had fewer than 250 stores. SCP Pool -- a company with 45% annual returns -- wholesales swimming pool supplies and chemicals!
Second, there's only one "tech" firm on the list -- and it's not one of the famous ones. Only four analysts are currently following Comtech.
Ten years ago, none of these companies were heavily followed by the pros on Wall Street. Even more incredibly, some still aren't.
Finally, none of these companies were worth more than $200 million 10 years ago. After 10 years of incredible growth, seven of them are still small caps! Only Chico's, NVR, and American Eagle have moved comfortably into mid-cap status.
Now compare that performance with the five best large caps of the past 10 years:
|
Company |
Current Market Cap* |
Return 1996-2005 |
|---|---|---|
|
UnitedHealth |
$75,360 |
660% |
|
Time Warner |
$84,770 |
644% |
|
Nokia |
$79,420 |
640% |
|
Amgen |
$94,300 |
431% |
|
Merrill Lynch |
$67,730 |
431% |
|
Total Average Return |
561% |
The market's 10 best stocks of the past 10 years -- all small caps -- absolutely pummeled the very best large caps.
The Foolish bottom line
The greatest stocks of the last decade were:
- Obscure
- Ignored
- Small
Now how many investors are searching for market-beating returns among the Microsofts and Starbuckses of the world? Twenty-nine and 16 analysts follow each of these stocks, respectively. But these companies can't beat the market -- they are the market!
So if you want to find the 10 best stocks of the next 10 years, you need to start small -- as in small caps. These are exactly the types of companies that we're following at Motley Fool Hidden Gems. We don't care about Microsoft. Instead, we follow Blackboard
But an $800 million company is probably still too big to be one of the 10 best when we look back in 2016. That's why we also offer Tiny Gems -- promising companies capitalized at less than $200 million. One of the next 10 best will likely come from there.
To take a look at the 60 small caps we're following and the Tiny Gems we've dug up, click here to take a free trial to Hidden Gems. You may not have heard of our companies -- but that's exactly the point.
This article was originally published on Dec. 29, 2005. It has been updated.
Tim Hanson owns shares of Blackboard and Time Warner. Microsoft is an Inside Value recommendation. UnitedHealth and Time Warner are Stock Advisor recommendations. No Fool is too cool for disclosure ... and Tim's pretty darn cool.
