Now's a tough time to be an investor. The market is ugly, stocks keep hitting new lows, and bonds are offering little in the way of yield. Right now, your mattress may be looking like a pretty good place for your cash.
The lessons of history, however, suggest that resorting to your mattress is not a smart move. The past has taught us that tough times like these can be the absolute best times to find the multibagger stocks that can help you build your nest egg.
The guy who found a 4,000-bagger
You probably haven't heard of Eugene Meyer. He was a government official back in the late 1920s working in Washington, D.C. Despite being a successful investor before his government service, Meyer felt that if you were working for the government, you shouldn't own stock in private companies.
As a result, Meyer kept his savings in government bonds and largely avoided the consequences of 1929's stock market crash.
In 1933, however, Meyer resigned from the government. While hunting for bargains, he got word that one of D.C.'s newspapers was going bankrupt. Sensing an opportunity, Meyer swooped in and bought the newspaper at auction for $825,000. Only a few years prior, that same newspaper had rejected a buyout offer of $5 million.
For the next few decades, Meyer worked hard to improve the quality and circulation of the paper. Although it was a struggle at times -- the paper suffered many years of losses during his ownership -- Meyer kept investing in the company.
Eventually, it paid off.
And now, the "reveal"
The newspaper Meyer purchased in 1933 was The Washington Post. Today, Washington Post (NYSE: WPO) is a $6.5 billion media and education enterprise -- and Meyer's family still owns a more than 40% stake worth $3 billion.
For those playing along at home, that's a 4,000-bagger.
Modern-day multibaggers
Most of us don't have $825,000 lying around, let alone the resources to buy a company whole-hog. Moreover, despite recent economic turmoil, we are probably not headed into a prolonged depression -- the kind that would cause a company like Washington Post to sell for pennies on the dollar.
That said, even 2001's more mild recession yielded a number of incredible multibagger opportunities:
|
Stock |
2002 Split-Adjusted Low |
Recent Price |
Gain |
|---|---|---|---|
|
Research In Motion (Nasdaq: RIMM) |
$1.39 |
$100.15 |
7,105% |
|
Bankrate.com (Nasdaq: RATE) |
$0.62 |
$44.30 |
7,045% |
|
Middleby (Nasdaq: MIDD) |
$2.25 |
$60.00 |
2,567% |
|
Apple (Nasdaq: AAPL) |
$6.68 |
$123.94 |
1,755% |
|
Dawson Geophysical (Nasdaq: DWSN) |
$4.80 |
$67.15 |
1,299% |
The Foolish bottom line
Yes, you could have bought Apple for less than $7 a share ... when it had $6 per share in cash!
So the next time you're staring down a seemingly ugly situation, remember Eugene Meyer. Meyer proved that when things look their worst, multibagger opportunities can abound for the investor that has cash to put to work.
If you have some cash to put to work but need a few ideas on where to put it, I encourage you to try Motley Fool Hidden Gems. We focus on finding small companies with multibagger potential and what's more, the recent volatility has many of our recommendations trading at or near their lows.
You can see our top picks for new money now by joining Hidden Gems free for 30 days. Click here for more information.
Fool contributor Matthew Argersinger does not own shares of any company mentioned. Bankrate.com is a Rule Breakers recommendation. Apple is a Stock Advisor recommendation. Middleby and Dawson Geophysical are Hidden Gems recommendations. The Fool has a disclosure policy.
