The greatest stocks of the past decade are not the ones you'd expect. I wouldn't have been able to name any of the top 10 on the spot -- which just goes to show that 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 | Recent Market Cap* | Return, June 1996 to June 2006 |
|---|---|---|
|
Hansen Natural |
$2,500 |
23,330% |
|
Christopher & Banks |
$932 |
15,916% |
|
Daktronics |
$825 |
5,032% |
|
Chico 's |
$3,220 |
4,696% |
|
NVR |
$2,820 |
4,524% |
|
Celgene |
$14,450 |
3,514% |
|
Frontier Oil |
$3,290 |
3,356% |
|
Meritage Homes |
$996 |
3,260% |
|
Expeditors International |
$8,530 |
2,803% |
|
Yahoo! |
$39,050 |
2,729% |
|
Average Return |
6,916% |
More than a few things are shocking about this list. First, these companies are, for the most part, 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 older, and 10 years ago it had fewer than 250 stores.
Even Yahoo! -- a household name today -- was just a $700 million Internet venture 10 years ago.
Ten years ago, none of these companies got a heavy following from the pros on Wall Street, and even more incredibly, some still don't.
Finally, none of these companies was worth more than $1 billion 10 years ago. Now compare their performance with the 10 best large caps -- companies that were worth more than $5 billion 10 years ago:
| Company | Recent Market Cap* | Return, June 1996 to June 2006 |
|---|---|---|
|
Lowe's |
$41,500 |
593% |
|
UnitedHealth Group |
$67,750 |
544% |
|
Target |
$41,420 |
478% |
|
Walgreen |
$50,900 |
469% |
|
Exelon |
$39,870 |
366% |
|
United Technologies |
$63,340 |
366% |
| Citigroup |
$240,030 |
364% |
|
Caterpillar
|
$44,790 |
363% |
|
Amgen
|
$80,080 |
342% |
|
Texas
Instruments |
$47,460 |
338% |
|
Average Return |
422% |
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 started out:
- Obscure.
- Ignored.
- Small.
Now, how many investors are searching for today's market-beating returns among the Targets and Texas Instruments of the world? Nineteen and 34 analysts follow 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 we're following at Motley Fool Hidden Gems. We don't care about Target. Instead, we follow Zumiez, a $575 million niche retailer that's set to capitalize on the growing alternative-sports trend.
But a $575 million company may still be 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 more than 60 small caps we're following and the Tiny Gems we've dug up, take a free trial of 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 does not own shares of any company mentioned. UnitedHealth is an Inside Value recommendation. Yahoo! and UnitedHealth are Stock Advisor picks. Daktronics was once a Stock Advisor choice. No Fool is too cool fordisclosure.
