Written by Rebecca Lipman
As humans, we often fall victim to feelings of regret, kicking ourselves for the decisions we have and have not made. To give us all more ammunition to fuel our self-regret, SmartMoney released a list of the ten best stocks of the past twenty years.
The 10 stocks, if purchased in 1992 (which coincides with the founding of SmartMoney's magazine - the purpose for this report), would have generated a total return of 9,839%.
That's nine-thousand-eight-hundred-thirty-nine-percent. In the meantime, a holder of S&P 500-stock index would have total returns of 382% - an admirable, but considerably lesser return.
Where's a time machine when you need one?
Qualifications: According to SmartMoney, "To screen for the 10 best stocks of the past 20 years, we first limited the search to companies that were in the Russell 3000 index in April 1992... Then we simply searched for the stocks that have produced the highest total return in those 20 years."
Additionally, (allow me to build the suspense) most of the companies "would have been relatively obscure in 1992. Some of these stocks are still mid- or small-caps today, which means they likely were micro-caps in 1992," says Paul Larson, the chief equities strategist at Morningstar.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the first nine stocks mentioned below.
Business Section: The List
Hindsight is 20/20: Here's what we wish we saw coming: (Click here to access free, interactive tools to analyze these ideas.)
1. Kansas City Southern (NYSE:KSU): Engages primarily in the freight rail transportation business. Market cap of $7.85B. Total return since April 1992: 19,030%. Originally, this company was part of an awkward conglomerate with money-management firm Janus Capital Group. It was considered less valuable and spun-off. "Back then, Kansas City Southern's profit margins were lower than the railroad industry average, but its tracks run into Mexico, so it's benefitted from NAFTA-fueled cross-border trade. Profit margins are now closer to industry norms." Current price (as of 3/13) at $71.38.
2. Middleby Corp. (Nasdaq:MIDD): Designs, manufactures, markets, distributes, and services a line of cooking equipment and related products, primarily in the U. Market cap of $1.86B. Total return since April 1992: 14,330%. "It's the most innovative company in the [cooking equipment manufacturer's industry," says Anton Brenner, an equity analyst with Roth Capital Partners, LLC. "They regularly add new labor-saving features to their equipment." Current price (as of 3/13) at $99.42.
3. II-VI Inc. (Nasdaq:IIVI): Develops, manufactures, and markets high-technology materials and derivative precision components and products worldwide. Market cap of $1.49B. Total return since April 1992: 10,423%. "'Two-Six' primarily sells components for lasers called 'optics.' Optics are like razor blades -- a key part of the overall equipment that regularly needs to be replaced," says Mark Douglass, a senior equity analyst with Longbow Research. The use of lasers in industrial manufacturing has grown multiple times faster than GDP since the 1990s, so 'they were basically riding the wave.'" Current price (as of 3/13) at $23.79.
4. EMC Corporation (NYSE:EMC): Develops, delivers, and supports the information and virtual infrastructure technologies and solutions. Market cap of $60.81B. Total return since April 1992: 9,624%. "Another tech firm that fell hard after the dot-com bust, EMC Corporation's shares were actually worth more than three times their current price of $28 in 2000. But this data-storage firm has been able to maintain a strong competitive position in a rapidly changing industry." Current price (as of 3/13) at $29.62.
5. QUALCOMM Incorporated (Nasdaq:QCOM): Engages in the development, design, manufacture, and marketing of digital wireless telecommunications products and services. Market cap of $109.69B. Total return since April 1992: 9,232%. "The company developed a technology called "code division multiple access," or CDMA, a key part of wireless networks. The many patents it holds on this technology allow it to collect royalties from almost every mobile handset maker." Current price (as of 3/13) at $64.85.
6. Oracle Corporation (Nasdaq:ORCL): Develops, manufactures, markets, distributes, and services database and middleware software, applications software, and hardware systems worldwide. Market cap of $151.43B. Total return since April 1992: 8,571%. "The company's stock actually peaked in 2000, rising to about $45 a share. It's recovered steadily since the dot-com bust, but at nearly $30 a share, it's still not all the way back." Current price (as of 3/13) at $30.13.
7. Diodes Incorporated (Nasdaq:DIOD): And its subsidiaries make and distribute standard semiconductor products to manufacturers in the consumer electronic, computer, communications, industrial, and automotive markets. Market cap of $1.10B. Total return since April 1992: 8,601%. The company's "revenues come from discreet components -- tiny, cheap chips that regulate the flow of power within an electronic device and are essentially the simplest kind of semiconductor there is," says Gary Mobley, a senior analyst with the Benchmark Company. Current price (as of 3/13) at $24.17.
8. Biogen Idec Inc. (Nasdaq:BIIB): Develops, manufactures, and markets therapeutics in the areas of neurology, immunology, hemophilia, and oncology in the United States and internationally. Market cap of $29.17B. Total return since April 1992: 6,334%. A "recent run-up in the shares is largely due to unexpectedly good clinical data on a new pill for MS", Piper Jaffray's Somaiya says. "It was one of those rare events in biotech where you just are utterly surprised with the benefit of a drug." Current price (as of 3/13) at $122.18.
9. Celgene Corporation (Nasdaq:CELG): Develops, and commercializes various therapies to treat cancer and immune-inflammatory related diseases. Market cap of $33.41B. Total return since April 1992: 6,244%. "The company has given investors exactly what they want from a biotech firm over the years," says Ian Somaiya, a biotech analyst at Piper Jaffray: "A stable earnings stream, defensible franchises, and visibility into long term growth." Current price (as of 3/13) at $76.14.
10. Astronics Corporation (Nasdaq:ATRO): Designs and manufactures products for the aerospace and defense industries worldwide. Market cap of $422.22M. Total return since April 1992: 6,004%. "Its stock price actually peaked in 2007, at nearly $50 a share; it's worth a little under $33 a share today." Current price (as of 3/13) at $34.16.
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Kapitall's Rebecca Lipman does not own any of the shares mentioned above.
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