Meanwhile, this article has an interesting look at the top stock growers
in the last five decades. For the next decade, though, picking
Egghead.Com is really reaching. I think the best stock of the next
decade will be Fork-Munchkins.Com ...
By the way, I *really* hope we don't have to call the '00s "The
Naughts"... I like "The Double Ohs" better...
> The best stock of the next decade will be . . .(EGGS)
> Wondering which of today's stocks will skyrocket after 2000? History's
> charts may offer some clues -- and probably will surprise you.
> By Mike Robbins
> With only one year left in the decade, it is all but certain that Dell
> Computer (DELL) will be the stock of the '90s. At last count, Dell
> shares were up an astounding 55,000%-plus in less than nine years,
> easily outdistancing all rivals in this decade or any other.
> Dell's victory isn't a total surprise. Anyone who's followed the markets
> this decade knows of the computer maker's remarkable success. Dell's
> strategy of building computers on demand and selling directly via mail
> order has given the company a distinct advantage on its competition by
> lowering inventory and sales costs. Besides, Dell is a computer company.
> It's logical that a high-tech company would lead the way in the 1990s.
> But high-tech or no, Dell won't be the first company that most of us
> will think of when we remember the past decade. Shouldn't the stock of
> the decade be the company with the greatest product innovation, or at
> least one that leads its sector? Let's face it, Dell might have strong
> management and a winning sales strategy, but there was seemingly little
> to keep other companies from copying the firm's business plan. "Dell's
> not a seminal stock," agrees Laszlo Birinyi, president of Birinyi
> Associates. "There's nothing about Dell that makes it a watershed."
> But watershed or no, 55,000% speaks for itself. What of EMC Corp. (EMC),
> with its dominant position in mainframe data-storage systems? Up "only"
> 25,000%. Cisco Systems (CSCO), with its dominant position in Internet
> infrastructure? Up just 22,500%. Software giant Microsoft (MSFT)? Up a
> measly 4,900% -- a figure that's surpassed even by America Online (AOL),
> which is up 18,000% even though it didn't get started until 1992. The
> big-chip stocks barely rate a mention: Intel (INTC) is up just 2,300%.
> What does this mean for investors in search of next decade's big winner?
> If you ask market analysts to predict the stock of the '00s, you'll hear
> a few young Internet stocks mentioned, as well as some support for
> larger but well-positioned technology companies including Cisco or
> Microsoft. But does history support these predictions, or when it comes
> to picking the biggest winners over decades, are cutting-edge
> technologies overrated?
> To find out, we asked Jim O'Shaughnessy, manager of the O'Shaughnessy
> Funds and author of the book "What Works on Wall Street" to screen the
> past half-century of S&P Compustat data to find out which stocks led the
> pack in prior decades. The results were a bit surprising.Top stocks of
> decades pastDecade
> Rank Stock Price Gain
> 1 Polaroid(PRD) 8,366%
> 2 Avon (AVP) 3,799%
> 1 Masco (MAS) 10,177%
> 2 Xerox (XRX) 5,146%
> 1 Keystone Int. 2,393%
> 2 ChemFirst(CEM) 2,170%
> 1 Circuit City (CC) 8,265%
> 2 Mark IV (IV) 6,998%
> 1 Dell (DELL) 55,000%
> 2 EMC (EMC) 25,000%
> Note: Only stocks that were publicly traded throughout the decade are
> included in each decade's standings.
> What do past decades' top stocks have in common?
> Not much, on the surface. Certainly they are not all among the companies
> we think of when we think of big stock market returns. In fact, only two
> of the eight, Polaroid (PRD) in the 1950s, and Xerox (XRX) in the 1960s,
> based their stellar performances on the sudden success of a breakthrough
> technology. For Polaroid, the innovation was the instant-picture camera,
> which the company first introduced in 1947. For Xerox, it was the 914
> copier, introduced in 1960. (Masco's introduction of the single-handled
> Delta faucet was undoubtedly an innovation, but to call a cool faucet a
> technological revolution would be a stretch.)
> As for more innovative companies of the past half-century, none made the
> cut. It's worth noting that many other cutting-edge companies have
> posted huge stock gains -- only to miss out due to timing. Remember: To
> make this list, your 10 years of stellar returns must match up with a
> specific decade, as the term is commonly used.
> Leopards changing their spots
> If technological innovation isn't the key to earning "stock of the
> decade" status, then what is? Repositioning appears to be one
> possibility. A significant number of the companies that made the top two
> in past decades were not recent start-ups at all, but rather older
> companies in the process of reinventing themselves.
> Take Masco. From its founding in 1929 (only a week before the Great
> Crash) until the mid-1950s, the firm mostly made screws and related
> products, largely for the auto industry. But in the mid-'50s, the
> company introduced the Delta faucet. By 1958, Masco opened a new faucet
> factory and was well on its way to becoming a diversified company with
> strong market share in building and home improvement products.
> ChemFirst (CEM) has a similar story. The firm came into existence in the
> late 1950s as a venture capital company. It didn't enter the chemical
> business until 1967.
> In the 1980s, Mark IV (IV) benefited from a repositioning. The company
> was founded in 1969 as a mobile-home manufacturer. Over the course of
> the 1970s, it became a maker of automotive and industrial parts. By
> 1981, Mark IV was out of the mobile-home business entirely.
> Notably, all three of the companies on this list decided to change their
> names to better their new focus. Masco was known as Masco Screw Products
> until 1961. Mark IV began life as Mark IV Homes, taking its new name in
> 1976. ChemFirst was founded as First Mississippi, but its name change
> occurred well after the stock's big decade was up.
> A closer look reveals that other companies on our list were reinventing
> themselves heading into their decade in the sun -- and renaming
> themselves as well. Xerox was primarily in the business of photography
> paper heading into the 1960s. Management believed so strongly that
> xerography copying was the company's future that in 1958, management
> changed the company's name from Haloid Co. to Haloid Xerox. In 1961,
> they changed it again, to Xerox Corp.
> Circuit City Stores (CC) was known as Wards Co. until 1984. The name
> change reflected the success of the chain's new Circuit City electronics
> "superstores." Keystone International, maker of valves and related
> products, was formerly known as The Keystone Tool Co. Its name change
> reflected the company's increasing globalization, which played a key
> role in the stock's decade of success. Keystone recently was acquired by
> Tyco International (TYC).
> Low-cost sales approach wins
> Dell isn't the only stock on the decade leader board that made it to the
> top largely through an innovative sales method rather than an innovative
> product. In the 1950s, much of Avon's (AVP) advantage over its
> competition was its sales force of "Avon Ladies." For Avon, they were a
> low-cost way to reach customers.
> Circuit City also was a low-cost sales innovator. The company invented
> the electronics superstore concept in the late 1970s, a high-volume
> approach that made Circuit City the low-cost electronics outlet in many
> of its markets. And Wal-Mart Stores (WMT) was up 4,700% in the 1980s on
> the strength of its low-cost superstore approach.
> "More than anything, what struck me looking at these results was what a
> great decade the '90s have been," says O'Shaughnessy. Not only has
> Dell's 55,000%-plus return blown away the winners of decades past, a
> handful of other stocks in the '90s have sprinted past the 10,000%
> return mark in the span of a decade as well -- a feat matched by only
> one stock previously, Masco in the 1960s.
> There are two possible lessons that can be drawn from this fact. Which
> you choose says something about you as an investor:
> Conservative investors might argue that the message is to proceed with
> caution in coming years, since our expectations might have been
> over-inflated by the '90s. Aggressive investors might read this as a
> warning not to sell winners too soon. The decade leader of the 1980s saw
> its price appreciate 8,300%. If you'd sold your Dell shares when they
> rose 8,300% this decade, you would have left an awful lot of money on
> the table.
> The stock of the naughts,
> So what will be the stock of the naughts? Well, any pick is going to be
> a long shot, but for what it's worth, we are pretty sure that the stock
> exists today and is currently a small cap.
> The only thing preventing us from anointing the likes of Amazon.com
> (AMZN) is its market cap today. Dell had just a $275 million market cap
> when it started its run of the '90s, while Cisco's was about $700
> million. Amazon's market cap already is more than $16 billion.
> Two related choices are eBay (EBAY) and Onsale (ONSL), companies that
> take a different approach to Internet selling. Rather than market their
> own products, the two online auction specialists allow individuals to
> sell to each other. Onsale additionally sells close-out merchandise for
> electronics retailers like Dell.
> Perhaps the best fit for our "stock-of-the-decade" model is Egghead.com
> (EGGS). The company is an Internet retailer, certainly a cutting-edge,
> low-cost sales strategy. And it's in the process of reinventing itself,
> making the shift from its former position as a traditional retailer. The
> company even altered its name, appending a ".com".
Economists state their GNP growth projections to the nearest tenth of a
percentage point to prove they have a sense of humor.
-- Edgar R. Fiedler