Here's an interesting article from this past summer, highlighting the top 25 stocks of the past 25 years.
If you put $100 into each of these stocks 25 years ago, your $2500 investment would of grown into $650,000 - not too shabby!
It's always interesting to see these lists because it truly shows if you pick correctly and have patience you can make serious bucks with just 1 correct selection. Of course you'd need to pick a stock with no hype (i.e. you won't get these results with a VMWare (NYSE:VMW)), and you'd have to buy the company when it has a very small market capitalization to reach such results. But even getting 1/3 of these results on 1 name could make up for a lot of other mistakes.
Of course letting your winners run for that long of a time takes loads of patience. Also with the pace of change and globalization, it's hard for companies in this era to retain a defensible moat for such a long period of time anymore.
I think everyone's first inclination is the top performing stock must be Microsoft (NASDAQ:MSFT). However, that's number 8! It's not even the top tech stock. Interesting to see the first few spots are in such staid industries as asset management and industrial measurement.
1. Franklin Resources (NYSE:BEN) +64,224%
2. Danaher (NYSE:DHR) +47,913%
3. Eaton Vance (NYSE:EV) +38,444%
4. UnitedHealth (NYSE:UNH) +37,672%
5. Cisco Systems (NASDAQ:CSCO) +33,632%
6. International Gaming Technology (NYSE:IGT) +33,436%
7. Biomet (BMET) +30,531%
8. Microsoft (MSFT) +29,266%
9. Best Buy (NYSE:BBY) +28,703%
10. Oracle (NYSE:ORCL) +28,535%
And the list continues down to #25 Harley Davidson (NYSE:HOG) +17,808%
I was surprised to see our favorite Smithfield Foods (NYSE:SFD) over there in slot 21 @ +19,414% - who knew?!
Looking at the top 3 spots, 2 of the 3 are asset managers... interestingly I have a very small cap asset manager which is basically ignored by all the news outlets, and just sort of does its thing: Diamond Hill Investment Group (NASDAQ:DHIL). I've slowly built up this position to be 2.25% of the fund; it boast a market cap of just $171 million. To get any of these type of returns, this company would have to build itself into some sort of financial powerhouse but I would be happy with 1000% return - I'm not greedy. ;-)
Diamond Hill has great growth in its assets under management, nice growth in EPS and management is planning to buy back 15% of its shares (it only has 2.2 million shares to start out with!). So if any stock in my group has a chance to replicate this sort of return, this would probably be the one.
Disclosure: My fund owns Long Diamond Hill Investment Group; I have no personal position in any of the stocks mentioned.