As the decade ends Crossingwallstreet.com compiled a list of the 25 best performing stocks of the decade. The list includes stocks with extremely impressive gains, with the 25th best stock producing a return of 1,887% over the past ten years. The top performer Green Mountain Coffee Roasters had a gain of 7,895.4% turning, $1,000 into a whopping 78,954 in a mere ten years. Below is the top ten performers of the decade.
GMCR…………..Green Mountain Coffee Roasters……….7,895.4%
HANS……………Hansen Natural………………………………….6,504.1%
BYI……………….Bally Technologies…………………………….6,394.2%
SWN…………….Southwestern Energy…………………………5,108.4%
CLH………………Clean Harbors……………………………………4,456.0%
DECK……………Deckers Outdoor……………………………….3,669.5%
AMED……………Amedisys…………………………………………3,669.2%
TNH……………..Terra Nitrogen……………………………………3,611.5%
BOOM…………..Dynamic Materials……………………………3,519.4%
QSII……………..Quality Systems…………………………………3,497.2%
In August 2000, Fortune Magazine ran an article titled “10 Stocks To Last The Decade”. The article predicted ten stocks that would outperform in the coming decade. The article stated “these ten should put your retirement account in good stead and protect you from those recurring nightmares about the stocks that got away.” Fortune denitrified four trends that “have the ability to transform the economy” . The article identified those four trends as 1.the lightning-fast changes in communications networking 2. the brave new world of entertainment 3. the “boomerization” of financial services and 4, biotech’s coming of age. The article stated further “So for help in finding the stocks best positioned to capitalize on these four trends, we sought out some of the top stock pickers in the country–Blaine Rollins, manager of the Janus fund, Kurt von Emster, manager of the Franklin Biotechnology Discovery fund, SunAmerica portfolio manager Frank Gannon, and strategist Marshall Acuff at Salomon Smith Barney, among others. We also did our own due diligence by poring through financial statements, talking to companies, and giving their products a test run. The result: ten stocks that we think will be winners over the coming decade. ”
Below is the performance of those ten stocks from August 2000 through November 2009. These stocks not only underperformed the S&P, they did significantly worse. An investor who put $1,000 into each of these stocks on the day the article was published, would be left with $4,013, a decline of over 60% nearly ten years later! Only one stock Genentech had a positive gain during this time period.
Below I complied a chart with the ten stocks predicted to outperform this decade, and the ten stocks that actually had the highest returns. I looked at data from 2000 and included P/E, P/B, P/Sales and P/CF from 2000.
Name Ticker Percentage Change P/E in 2000 P/B in 2000 P/sales in 2000 P/CF in 2000
Green Mountain Coffee Roasters. GMCR 7,895.4% 37.3 12.3 1.9 31.5
Hansen Natural. HANS 6,504.1% 10.2 1.8 .5 –
Bally Technologies BYI 6,394.2% – – .2 3.1
South Western Energy SWN 5,108.4% – 1.8 .7 –
.Clean Harbors. CLH 4,456.0% 3 .5 .1 1.6
Deckers Outdoor DECK 3,669.5% 7.1 .8 .4 3.4
Amedisys AMED 3,669.2% – – .2 2
Terra Nitrogen TNH 3,611.5% 8.2 – .6 3
Dynamic Materials BOOM 3,519.4% – – .1 –
Quality Systems. QSII 3,497.2% 16.8 1.5 1.3 14.6
Genentech DNA 153.04% – 7.5 35.8 –
Univision Now Private, No Data -38.14
Oracle ORCL -39.74 25.5 33 16.1 90.9
Charles Schwab SCHW -47.89 55.6 9.3 6.3 22.3
Viacom VIAB -56.52 – – – –
Morgan Stanley MS -56.96 16.8 4.7 3.4 –
Nokia NOK -74.72 56.5 80 29.2 –
Broadcom BRCM -81.21 – 4.4 21.2 116.3
Nortel NRTLQ -100 – 3.3 3.4 –
Enron No Data -100
The ten best performing stocks in general were undervalued relative to the market ten years ago. Some stocks like Clean Harbor were ridiculously cheap trading at three times earnings and at half its book value. Many of these companies did not have earnings and, therefore could not be measured by their Price to Earnings ratio. However, most of the stocks in the list measured in other metrics such as Price over cash flow was undervalued relative to the market. For example, while Bally technology had negative earnings for the year it traded at only .2 Price/Sales and a very low 3.1 P/CF. None of the stocks in the top performers could be considered expensive except for Green Mountain Coffee Roasters. The stocks were from a broad range of sectors, with no market sectors dominating the list. Consumer goods, healthcare, service and basic materials were all on the list. It is notable that not one technology company was on the list. This likely would have shocked the analysis who were predicting endless gains for technology companies in the late 90s.
The top ten predictions were not as diverse. Four out of the ten companies were in the technology sector. This is not uprising as, I noted earlier that technology stocks were the glamour stocks of the day, yet not one of them were a top ten reformer, and as I noted in my previous article technology stocks were the worst performing sector this past decade. Most of the stocks were very overvalued, Nokia in particular stood out trading at 56 times earnings, and 80 book value. Nortel based on book value was not overly expensive. However, considering that Nortel has lost money every from 1999-2009 besides 2003, 2006 it is hard to justify it fairly valued at any price. Morgan Stanley is the only stock on the list that was not trading at a high premium, from the list.
What will be the best performing stocks of the next decade? There is no way to predict it. It is unlikely any of the 20 companies on this list will be among the best performers. It is equally unlikely that the best performers will bet fast growing, “new economy” companies trading at high premiums like Apple, or Google. It is more likely to be boring “old economy” stocks like Hansen Natural which makes soft drinks and trades at a low value that will be the best performers.
Disclosure: Long VIAB
