Every year Forbes makes a list of the 200 best small companies in America. They do everything they can to find the best of the best, weeding out those without stellar track records or that may face pitfalls going forward, but there is no guarantee that anyone on the list will continue on their prosperous path.
So how do the companies that top the list do moving forward? To answer that question, let's look at the number one company from this list over the last decade and how they are doing now.
2000 - Trex (TWP)
Trex makes non-hardwood decking, typically out of a wood/plastic composite. The reduction in maintenance, appearance and durability provide its advantage in the market place. Trex has had a rough go of it since topping the list and reaching an all-time high of over $55 per share in 2000. Not even the building boom mid-decade was enough to send this building material company upward, but it has survived the downturn.
It may still lose money this year, but as building resumes, Trex may be able to get back on track. (If you don't realize how "big" small-cap stocks can be, you'll miss some good investment opportunities. Check out What Is A Small Cap?)
2001 and 2002 - Chico's FAS (CHS)
Chico's sells clothes and accessories primarily to women with moderate to high income. They now operate more than 1000 stores as well as selling directly through the web and their catalog. They were clearly a hot commodity when they were on top of the Forbes list. In 2000, their stock was under $5 a share and they barely had 200 stores. Growth helped the stock to skyrocket to ten times that in early 2006, approaching $50 a share. But even before real estate went bust and the economy tanked, the shares fell back into single digits.
Recently the company has rebounded as the economy has improved. The growth also pushed it beyond the small cap market; the company now has in excess of $1.5 billion in revenue. So while Chico's isn't the growth story it used to be, it's clearly making it over the long term.
2003 and 2004 - Cognizant Technology Solutions (CTSH)
Cognizant provides custom information technology consulting and technology services. When Cognizant lead the list in 2003, the stock had just broken into double digits. It continued up to almost $50 a share at the peak in 2006 until reversing to bottom in late 2008. While the stock price may have been a bit choppy, the sales figures haven't been. With revenue increasing every year, topping $3 billion this year, clearly Cognizant is doing a lot of things right.
They have also grown well beyond the small company moniker as they are now part of the S&P 500, joining the largest companies in America with an $11 billion market cap.
2006 - NutriSystem (NTRI)
NutriSystem provides weight management products and services, notably prepackaged food. When NutriSystem topped the list in 2006, the company was firing on all cylinders. But as purse strings tightened, sales fell and are still falling. This dropped the stock from a high of over $70 to under $20 per share.
However, there is hope as an economic recovery will increase discretionary dollars that could be used for such programs, and there are still plenty of people that want to lose a few pounds.
2005 and 2007 - Hansen Natural (HANS)
Hansen Natural distributes a line of all-natural beverages. Although the stock price took the a hit during the downturn of 2008, the company managed to increase sales volume, passing $1 billion in sales and still make a reasonable profit.
As the economy recovers, it seems reasonable that sales for specialty drinks should only get better. (Different funds invest in companies with different market caps. Find out which is right for you in Determining What Market Cap Suits Your Style.)
2008 - GeoResources (GEOI)
GeoResources is the latest number one in the Forbes 200 list. GeoResources engages in the acquisition and development of oil and gas reserves in the United States. When their top spot on the list was announced, oil was well over $100 a barrel, which made this company sound very attractive. Since then, oil has come down, as has their stock price. But even thought their prospects are directly tied to oil prices, having millions of barrels of onshore oil reserves can't be overlooked.
Overall, the companies noted here have done pretty well. While they may have come off their stellar performance in the past, that only goes to show that they face the same macroeconomic environment that all companies do - they aren't recession proof and economic downturns hit them too. But overall, they are a group of stable firms, some of which are still moving upward on that path to even greater prosperity.