The Big Mac and Ralph Lauren's Purple Label were both created by dreamers who could not wait for college graduation. The following will give investors a look at three companies headed by college dropouts that have managed to outperform the S&P 500 since the beginning of the year.

College? I'm Hatin' It
Ray Kroc, often thought of as the founder of the $16 billion McDonald's (NYSE:MCD) empire, actually bought the rights for the franchise and the name from the McDonald brothers. Ray was a milkshake salesman at the time that had previously worked in real estate and as a jazz musician. Today with over 31,000 restaurants in 118 countries McDonald's is committed to the same basic core values of quick and clean service. During the first six months of 2008, McDonald's completed a $2.8 billion buyback of 50.4 million shares and it paid out $848 million in dividends signaling that its financial house is in order. Since the beginning of the year McDonald's is nearly flat, returning -1.64% while the SPDRS S&P 500 Index ETF is down -27.66%. (For related reading, see Is Buying A Franchise Wise?)

Purple Labels Clash with Sheepskin
Ralph Lauren, known for his $4.8 billion Polo Ralph Lauren (NYSE:RL) company, displayed a passion for fashion from his school age years when he would work after school to earn money to buy suits. He moved onto selling neckties of his own design to friends. After leaving college early, serving in the army and working as a Brooks Brothers salesman, Ralph Lauren received backing to start his own necktie store under the "Polo" label. The company's popularity continues to grow. It was chosen by the U.S. Olympic Committee as an official outfitter for the 2008 U.S. Olympic and Paralympic Teams.

The exposure is good for business since Ralph Lauren's fastest growing markets outside of the U.S. are in Europe and Japan. International sales of Ralph Lauren apparel have risen from 19% of sales in 2006 to 25% of sales for fiscal year 2008. Ralph Lauren is down 8.61% since the beginning of the year.

Dropout Data King
Larry Ellison, who once worked on a database for the CIA that he named "Oracle" during the '70s, is the founder of the $22.4 billion Oracle Corporation (Nasdaq:ORCL). Ellison did not finish college, but he was exposed to computer design while attending. Later, a paper on relational database systems instigated the creation of a company that would become the information juggernaut we know today as Oracle. From fiscal 2007 to 2008 Oracle's revenue increased 25% driven by new software license revenue, software license updates and product support revenue. At -18.63% since the beginning of the year, Oracle stock is down the most among our trio of dropout startups.

Final Thoughts
Not all success stories begin with a college diploma. Investors may be shocked to learn that, along with the successful dreamers we've highlighted above, other successful dropouts include: Bill Gates, Steve Jobs, Kirk Kerkorian (dropped out in grade 8) and Ted Turner. Investor should note that entrepreneurs who can identify products and services that people or businesses need are leading companies that can outperform the broad market even during tough economic times.

Speaking of entrepreneurs and business, check out Small Business: It's All About Relationships.

Related Articles
  1. Stock Analysis

    5 Cheap Dividend Stocks for a Bear Market

    Here are five stocks that pay safe dividends and should be at least somewhat resilient to a bear market.
  2. Entrepreneurship

    Top 3 Most Successful Korean Entrepreneurs

    Discover the backgrounds of some of the most successful Korean entrepreneurs and information about the companies and projects leading to their success.
  3. Entrepreneurship

    Top 3 Most Successful African Entrepreneurs

    Discover the educational backgrounds and entrepreneurial ventures of some of the most successful and well-known African entrepreneurs.
  4. Entrepreneurship

    Top 5 Most Successful Swedish Entrepreneurs

    Understand what makes Sweden a great place for entrepreneurship. Learn about five successful Swedish entrepreneurs who are making big impacts.
  5. Investing

    How to Win More by Losing Less in Today’s Markets

    The further you fall, the harder it is to climb back up. It’s a universal truth that is painfully apparent in the investing world.
  6. Fundamental Analysis

    Use Options Data To Predict Stock Market Direction

    Options market trading data can provide important insights about the direction of stocks and the overall market. Here’s how to track it.
  7. Investing

    Essential Tips on Making Your Hobby Your Career

    Here are some ways to turn what you love to do for fun into your job.
  8. Entrepreneurship

    Top 5 Most Successful Mexican Entrepreneurs

    Understand why so many socially conscious entrepreneurs have come out of Mexico. Learn about the top most successful Mexican entrepreneurs.
  9. Investing

    Oprah Winfrey Biography

    Oprah Gail Winfrey is an American media magnate, television and film producer, and talk show host with a net worth of roughly $3 billion.
  10. Stock Analysis

    2 Oil Stocks to Buy Right Now (PSX,TSO)

    Can these two oil stocks buck the trend?
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!