The greatest stocks of the past decade are not the ones you'd expect. And I suspect that when 2006 ends next month and we look at the best stocks from 1997 through 2006, the names will still be unfamiliar.

See, there's no way I would have been able to name any of the Top 10 on the spot. That 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 from 1996 through 2005:

Company

1996 Market Cap*

Return

Hansen Natural

$11

24,185%

Chico's

$48

17,600%

NVR

$151

7,150%

Christopher & Banks

$28

6,795%

Meritage Homes

$23

5,860%

American Eagle Outfitters

$236

4,850%

Comtech Telecommunications

$7

4,315%

Pool Corp.

$81

4,090%

Engineered Support Systems**

$47

3,800%

Jos. A. Bank

$29

3,790%

*In millions. Historical price data provided by Capital IQ and adjusted for dividends.
**Acquired by DRS Technologies.


There are more than a few things 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. Pool Corp. -- a company with 45% annual returns over the decade -- 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 five analysts are currently following Comtech.

Ten years ago, none of these companies were heavily followed among the pros on Wall Street, and even more incredibly, some still aren't.

Finally, none of these companies was worth more than $250 million 10 years ago.

An unfair comparison
Now take a look at those returns and compare them with those of the 10 biggest companies way back in 1996.

Company

1996 Market Cap*

Return

General Electric (NYSE:GE)

$120,260

248%

ExxonMobil (NYSE:XOM)

$99,955

258%

Coca-Cola

$93,136

24%

Merck (NYSE:MRK)

$80,805

34%

Toyota Motor (NYSE:TM)

$79,364

167%

Altria

$75,335

298%

Procter & Gamble

$56,965

235%

Johnson & Johnson (NYSE:JNJ)

$55,372

232%

Microsoft (NASDAQ:MSFT)

$51,975

433%

Norsk Hydro (NYSE:NHY)

$51,954

240%

*In millions. Historical price data provided by Capital IQ and adjusted for dividends.

As you can see, they don't even come close.

The Foolish bottom line
The greatest stocks of the last decade started:

  1. Obscure.
  2. Ignored.
  3. Small.

Now, how many investors are searching for market-thumping returns among the Microsofts and ExxonMobils of the world? Forty and 20 analysts follow each of those 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 Microsoft. Instead, we follow Blackboard, an $800 million software firm that supplies 2,225 educational institutions and has 90% product renewal rates.

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 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 Dec. 29, 2005. It has been updated.

Tim Hanson owns shares of Blackboard. American Eagle is a Stock Advisor recommendation. Coca-Cola and Microsoft are Inside Value recommendations. Johnson & Johnson and Norsk Hydro are Income Investor picks. Merck was once an Income Investor choice. No Fool is too coolfor disclosure.