Please ensure Javascript is enabled for purposes of website accessibility

The Greatest Stock Story Ever Told

By Paul Elliott - Updated Nov 11, 2016 at 3:56PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

You can make more doing less. Here's how.

Can you spot a winner? I can. Maybe not every time, but more often than not. I call it my special purpose.

But can it make you rich?
Sure. Imagine you paid that guy Hiro from Heroes to bend time and space for you. You could whisk back to July 1995 and buy Dell. Take along $1,000, and you could have earned $38,000 over the next 10 years.

While you're there, grab some AOL for $1.66. That nets you another 10 grand in 10 years. One thousand invested in Cisco Systems grows to $6,000.

You're probably wondering: If you could bend time and space, would you really only invest $1,000? Well, that's what you should be wondering. What you're really wondering is whether I'm simply pulling winners out of my hat. Well, I'm not. I'll even show you a table to prove it.

That's right, I said a table
In fact, I heard about all three companies you just saw (and others you're about to see) one sunny day in 1995. And every one of those stories made perfect sense to me at the time. Remember, we're not talking 1989 here.

With the exception of AOL, every business we'll discuss today was proven in 1995. They were all industry leaders ... they were run by entrepreneurial zealots ... they essentially printed cash ... and insiders loved them.

Best of all, these companies were only modestly huge at the time, which made them attractive to institutions, yet left them room to run. Only one thing could have made them better, as you'll soon see. But first, it's time I revealed my source and showed you that table.

I won't keep you hanging
A fellow named Tom Gardner turned me onto those stocks in 1995, plus the others in the table below. Tom's a founder of The Motley Fool. He's also bald and tells good stories. In 1995, he got it into his bald head to build a portfolio we could hold for 10 years.

Here's how we fared...

Company

7/7/95

7/5/05

Return

Sun Microsystems (NASDAQ:JAVA)

$6.34

$14.56

230%

Gap (NYSE:GPS)

$4.60

$19.19

417%

Microsoft (NASDAQ:MSFT)

$5.00

$23.71

474%

Hewlett-Packard (NYSE:HPQ)

$13.45

$23.08

172%

Data from Yahoo! Finance. Adjusted for splits and dividends.

All together, there were 10 stocks in all. After 10 years, we were up 667% (versus 147% for the S&P 500) -- turning $10,000 into some $77,000.

But you could have done better
Of course, if you want to do better, you have to go farther back in time -- to when these companies were smaller. If you had bought Dell in 1991, for instance, you'd have ended up with four times as much. Same with Cisco. Clearly, great stocks like these get better when you get in early.

That's why industrial giants like Boeing (NYSE:BA) or even megacap "techs" like Yahoo! (NASDAQ:YHOO) didn't make Tim Hanson's list of the market's 10 best stocks. But tiny juice-maker Hansen Natural (NASDAQ:HANS) did -- it earned investors 21,201% in 10 years.

That's also why, when Tom Gardner founded his Motley Fool Hidden Gems stock-picking newsletter service, he handpicked a team of analysts dedicated exclusively to finding unknown, well-run smaller companies.

Can they earn you 667% in 10 years?
Probably not. That’s a tall order. But your chances of catching a massive gainer like the ones we just discussed skyrocket when you buy small companies, before they hit Wall Street’s radar. I know that much.

You just need to know a good story when you hear one. Or hear better stories. That's why you should meet the guys working for Tom G. at Hidden Gems. Especially now that you can try the service for free. There's no pressure to join, and you get six full years of great stories while you mull it over.

If you think now is a scary time to be buying stocks, I don’t blame you. But that’s good news. It’s precisely "panics" like these that make it possible for us to earn such fantastic returns investing in America’s best small companies. All we need is the guts to buy and a few good stories. The guys at Hidden Gems can help. To learn more about taking a free trial, click here.

This article was originally published on Dec. 5, 2006. It has been updated.

Fool writer Paul Elliott doesn't own any of the stocks mentioned. AOL parent company Time Warner and Gap are Motley Fool Stock Advisor recommendations. Gap, Dell, and Microsoft are Inside Value picks. The Motley Fool has a disclosure policy.

None

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

HP Inc. Stock Quote
HP Inc.
HPQ
$34.65 (1.26%) $0.43
Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$291.91 (1.70%) $4.89
The Boeing Company Stock Quote
The Boeing Company
BA
$169.99 (1.26%) $2.11
Monster Beverage Corporation Stock Quote
Monster Beverage Corporation
MNST
$90.02 (0.81%) $0.72
The Gap, Inc. Stock Quote
The Gap, Inc.
GPS
$10.64 (2.50%) $0.26

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/13/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.