Over the last 5 years the Dow Jones Industrial Average is trading near even while the S&P 500 is trading with a loss of nearly 8%. The reason for this performance can be connected to the recession and our economic goal of recovery. During the last 5 years we spent half the time crashing and the other half trying to recover. However, there have been several stocks that significantly outperformed the market with constant gains during this time of volatility. Below is a look at 10 stocks, trading near an all-time high, that performed among the best within the market over a period of five years. The companies' growth, technicals, and fundamentals, will be observed in an attempt to predict the possible future for these growing companies.
|Company||Ticker||3 month||YTD||1 year||2 year||5 year|
|Deckers Outdoor Corporation||DECK||26.6%||26%||122%||324%||553%|
|Green Mountain Coffee Roasters||GMCR||37%||228%||216%||418%||3895%|
|Bed Bath & Beyond||BBBY||13.3%||22%||49%||65%||62%|
|Ticker||Price||Cap. (in billions)||P/E||Beta||Yield|
The 2 chart's above show measurables for 10 of the most successful stocks of the last several years. These companies have each been very rewarding to shareholders by offering a product or service that has been successful and continues to grow. These stocks all trade differently, as you can see from the charts, and although each has been successful the trends have been unique. Below is a brief look at the above information and my opinions of each company moving forward based on previous success.
Deckers Outdoor Corporation is a designer, manager, and marketer of footwear and accessories. The company has long-term success by capitalizing on trends within the industry, which includes the UGG and Teva brands. Most believe the UGG brand is driving the company's sales, and the earning reports prove the beliefs to be correct. The UGG brand recorded the majority of the company's revenue with its first true spring line-up being successful according to the earnings report. The company expects to have a strong second half of the year as the brand continues to grow. The company's growth has been consistent, by being able to set trends in footwear over the last several years. However, the company must continue, and although the next few years look encouraging, I wonder how long the company can maintain its current level of success. The company has to continuously set trends and stay ahead of what the consumer wants and I believe it's a hard and dangerous game to play. This stock could very well continue to outperform the market for the next 20 years but its success is based off its ability to recognize trends which makes me skeptical of its long-term growth.
Green Mountain Coffee Roaster is engaged in the specialty coffee and coffee maker business. The company has experienced unprecedented success over the last five years as business continues to climb along with the price of coffee. The company has improved earnings, revenue, and its balance sheet over the last several years. My only issue with this company is that it trades on speculation and high expectations with a P/E over 100. In this economy trading so high above earnings can be dangerous for investors as one missed earnings report can result in a significant amount of loss. As an investor, I believe continued success is likely, however I would keep a close eye on the price of coffee and any developments that could affect company earnings.
Amazon has been one of the most consistent companies of the last 10 years as it continuously increases revenue and income. The company benefits from online consumerism as being the number one online store where consumers can purchase a variety of merchandise, either new or used. The company has been successful at reinventing itself over the years with new levels of business and advertising. It's consistently increased assets and decreased debt and appears to have a strong position to remain relevant for the next 10 years. However, the company presents the same issues as GMCR with a P/E over 100 and investors that trade off high expectations. Although the company is yet to miss earnings it would only take one time to drastically affect the value of this stock. Companies are placing more emphasis on the online consumer by attempting to create better online sites that attract the online shopper therefore Amazon could be affected in the future. Hopefully, Amazon will continue to evolve with its ever-growing cash pile and will be able to adapt as companies such as Best Buy (NYSE:BBY) and Wal-Mart (NYSE:WMT) prioritize the online business.
MasterCard continues to trend higher as other financials trend lower. The company has managed to increase revenue, profit margins, and assets over the last three years while decreasing its debt. According to the company's last earnings report the strongest areas of growth include the Asia/Pacific, Latin America, Middle East, and Africa. Each of the regions being developed have shown a high level of growth. The company's success in these regions should result in more gains and better profit margins for a company that is growing at an impressive speed.
Bed Bath & Beyond has been a consistent stock over the last several years. The stock is now trading at all time highs as earnings get closer, the company has performed substantially better over the last 2 years with higher revenue, income, assets and no long term debt along with a strong cash flow. The stock has experienced modest gains in comparison to the other stocks on this list however I believe the company's strong balance sheet and commitment to growth could result in long-term success.
Dollar Tree is one of my favorite stocks for the next 5 years. With unemployment rates at 9.1% and the number of underemployed Americans remaining high the consumer needs a bargain for their buck. And Dollar Tree gives the consumer a bargain, with everything in the store being $1. The Dollar Tree sells everything from food, cleaning supplies, laundry detergent, cooking utensils, seasonal merchandise, etc. and all for just $1. During the last quarter the company posted EPS growth of more than 20% for the 10th consecutive quarter, despite its cost in development. The company opens stores at an incredible rate with 159 new stores during the first half of 2011. What's even more impressive than the company opening a new store everyday is that it continues to keep total debt at the same levels, which are very low. I believe the company is setting itself up for long term growth and with every product only $1 I don't see consumer's not using the store even if the economy improves.
McDonalds Corporations is very similar to the Dollar Tree as it offers a good product for a cheap price. The company increased its revenue by nearly $1 billion last quarter as it continues to expand its business throughout the globe. The company has done a good job at incorporating successful changes within its company such as the McCafe that has been the fastest growing segment over the last year. MCD is one of only two stocks on this list that pay a dividend and the only one that pays a dividend that is strong enough to provide security for the investor. McDonald's has continued to grow for more than 30 years and I can't find any reason to believe the company will not continue.
Apple is the most innovating company, in technology, over the last 5 years. The company has risen from near bankruptcy to become one of the largest corporations in the world. I believe the company is set up to continue similar levels of success, even without Steve Jobs, for the next 3-5 years. The company could easily build on the iPhone and iPad creating new models with new technology and be successful for years to come. Yet I believe that at some point another company will create something bigger and better. Throughout the history of communication devices several companies have been transcendent to only fall. Remember the Razr and Motorola (NYSE:MMI) or more recently the Black Berry and RIMM? Apple may continue to grow for the next 10 years but in my opinion it's doubtful as competition is at an all time high.
Both Jazz Pharmaceuticals and Questcor Pharmaceuticals are odd picks for this list because of size, but there are very few companies in biotechnology that have experienced the same level of success and I expect these companies to achieve more success. Both companies have products that have led to big gains in a short period of time and neither of the products appear to be slowing or close to reaching a limit anytime soon. My only concern is a limited pipeline, since companies such as Pfizer and Merck have multiple lines of revenue from many products while these two companies have only a few drugs with a modest pipeline. I believe that both companies will continue to grow over the next couple year but must continue to work in research & development if long-term success is to be achieved.
Disclosure: I am long MCD, DLTR, JAZZ. As with any investment, due diligence is required. The opinions in this article are not intended to be used to make a particular investment or follow a particular strategy.