What companies have consistently outperformed the rest in the past five years? You might be surprised. David Forrest (TMFBogey) looks at three of the least known but best performing stocks on the market.
It might be a stretch to say that nobody knows these three companies, but in looking for some of the most consistently outstanding performers in the marketplace over the past five years, I came up with some very unfamiliar names. With so much publicity given to companies like JDS Uniphase
David Gardner will happily tell you that the clichéd mutual fund disclaimer of "past performance is no guarantee of future results" is completely wrong. In fact, DG has said on many occasions (and I agree) that past performance is almost always an indication of future results. Think about it: If you had to bet on the State spelling bee blue ribbon winner, would you go with bonehead Bobby who has failed most of his spelling tests in school or sensational Sally who regularly checks in with 100% on her papers? My money is on Sally. The same principle generally holds true in all walks of life -- business and the stock market included.
Top price performance
In looking for these companies, I did a very basic screen where I measured the price performance of all stocks during five different time frames: five years, three years, two years, one year, and six months. (This is different from The Motley Fool's own monthly screen, the Foolish 8 Spreadsheet, which provides growth stock ideas based on other criteria.) The point of looking at each of these time frames, even though some of them are short-term, is to see if there were any stocks that simply kicked butt in all the varied market environments of the last five years.
The software I use ranks each of the stocks for the different time frames on a 1 to 99 scale, providing its relative price performance -- relative strength -- against the other roughly 10,000 stocks in the database. At the time of this writing, only three companies ranked better than 90% of the others in ALL the time frames. The first one is... Daktronics Inc.
David Forrest (TMFBogey) isn't afraid to admit that he's practiced acts of technical analysis behind closed doors, and now for the whole public! He owns no shares of companies mentioned in this article. To see his stock holdings, view his profile.
Three Great Unknown Stocks represents the opinion of one Fool and should in no way be taken as the opinion of either The Motley Fool, Inc. or the company in question, or as representative of anyone or anything other than that specific Fool's thoughts. Which can be way out there, so do your homework, and review The Motley Fool's disclosure policy.
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