Winning stocks with impressive long-term returns can do more than tantalize investors. They might also guide us to the next great stock. For example, computer seller Dell
Finding the tail on this coat
Selling computers direct to consumers has been the hallmark of Dell's business from day one. After its IPO in 1988, Dell went on to become the largest seller of PCs by 1999, surpassing Compaq, now part of Hewlett-Packard. Dell's efficient supply chain and build-to-order approach (modeled after Toyota Motors
If we can nail down some companies profiting from -- or leveraging -- the efficient business model that Dell perfected, we might find a hidden treasure worthy of investment. With a giant like Dell, investors typically follow the conventional wisdom, looking only for direct suppliers or partners. This may lead to obvious choices such as server virtualization partner VMWare or retail partner Wal-Mart. However, investors who stick to these usual suspects risk missing opportunities less directly linked to Dell.
Motley Fool CAPS can really help us here. The massive Foolish stock database has lots of tools for finding and researching stocks and the people who pick them.
Tagging along with CAPS
With CAPS, investors can look through Dell's tag list for other companies sporting similar attributes. For instance, Dell falls under tags such as Personal Computers, Top Brands 2006, and Founder CEO. In addition, the comments CAPS investors leave regarding rated companies can sometimes lead to similarly attractive investments, even those with little or no direct connection to Dell.
These CAPS resources could point investors to companies like China's top online travel booker, Ctrip.com
CAPS also turns up another interesting company that shares many attributes with Dell: Harley-Davidson
Of course, plenty of coattail investments have proved to be mere copycats, ultimately flopping for investors. That's why CAPS is best used as a research tool, not a device to pick stocks for you. Rather than taking anyone else's recommendation, investors should always perform their own due diligence. But you can't beat the information and resources for the price -- namely, 100% free.
Is there another stock you know about that has Dell's wind in its sail? Give your own opinion in Motley Fool CAPS.
Ctrip has returned a whopping 252% since it was first singled out for Motley Fool Hidden Gems newsletter subscribers. To see what other stocks are being picked today for market-beating performance, check out a free 30-day trial.
Fool contributor Dave Mock has never worn a coat with tails; he prefers the waiter style. He owns no shares of companies mentioned here. Dave is the author of The Qualcomm Equation. Dell and Wal-Mart are Inside Value recommendations. Dell is also a Stock Advisor recommendation. The Fool's disclosure policy is often imitated, but never duplicated.