[MoneyCentral] Top stocks of the 50s through 90s.

I Find Karma (adam@cs.caltech.edu)
Wed, 23 Dec 1998 04:09:51 -0800 (PST)

One week till the Euro. No Fed rate cut yesterday. Brace yourself.

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
> http://moneycentral.msn.com/articles/invest/strat/2892.asp
> 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
> 1950s
> 1 Polaroid(PRD) 8,366%
> 2 Avon (AVP) 3,799%
> 1960s
> 1 Masco (MAS) 10,177%
> 2 Xerox (XRX) 5,146%
> 1970s
> 1 Keystone Int. 2,393%
> 2 ChemFirst(CEM) 2,170%
> 1980s
> 1 Circuit City (CC) 8,265%
> 2 Mark IV (IV) 6,998%
> 1990s
> 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