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Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerLast week USA Today ran an article that caused millions of us to pause and think, "Gee, I wish I would have owned..." or "I knew that company was going to be huge!" The article highlighted the best 25 performing stocks of the past 25 years. From Microsoft Corp. (NASDAQ: MSFT) to Oracle Corp. (NASDAQ: ORCL) to Dell Inc. (NASDAQ: DELL) to Eaton Vance (NYSE: EV) to Franklin Resources, Inc. (NYSE: BEN). Well, you get the idea. As I wrote about recently, any of these stocks bought 25 years ago and you'd be on Easy Street -- wherever that is. $100 invested in all 25 stocks, 25 years ago, would be worth $650,000 today. Imagine what $1,000 invested in each one would be worth today? You'd be measured in GDP terms!
So, now the next natural step is to figure out what are the top 25 stocks for the NEXT 25 years. But before I do this brain-teasing -- or crushing -- exercise, I have to lay out a few assumptions and a few ground rules.
First and foremost, the top 25 for the NEXT 25 years are certainly sub-$1 billion in market capitalization (market capitalization is all shares of a company times the market price). With the assumption of sub-$1 billion market cap, that may already eliminate a lot of our current favorite stocks. I mean, I love Apple and Google, but they have $82 billion and $150 billion market caps respectively. Sure, one could argue that both will be $300-400 billion in market cap at some point, but that's ONLY a 4-5 times increase in our money. Way too paltry for this exercise!
Another assumption is a bit haunting when you think about it. I bet that three or four companies on the future 25 list are not even public companies yet! They are still private and will offer their initial public offerings at some point in the next 1-5 years. But, I have to pick 25 current, publicly traded companies to make our list viable.
Where will they come from? Which industries or sectors? Who's got the best mousetrap? Who's building the even-better mousetrap?
It is probably safe to assume that 5-6 names will come from the technology space, including software. Five to six from the general medical sector, be it drugs, devices or processes. These two fields are so huge, so evergreen and fortunately for mankind, so innovative.
I have to imagine that the burgeoning field of alternative energy will also give us 5-6 names for the NEXT 25 stocks. Alternative energy is benefiting from venture investing at the levels the internet-based companies saw in the early '90s. It will be enormous, so get ready to think green.
So far that's 15-18 companies. What else will capture our fancy and our wallets? Two-three will come from the retailing world, be it physical retail or online. But there are a couple of concepts that have massive, sustainable potential.
Then comes the miscellaneous camp -- the wild cards. Will the last 5-6 companies be in shipping? General transportation? Leisure and gaming? Housing and materials? There's a lot to choose from, new and exciting concepts, new and innovative technologies.
Well, my list is almost ready. By the way, if I am right on just one or two companies for the next 25 years, it will more than make up for the 23-24 I will have guessed wrong. So beginning next week I will feature one or two stocks per day -- some will surprise you and some you will have never heard of. So let the games begin...
Georges Yared is the CIO of Yared Investment Research where he explores more growth stock ideas.
Georges Yared's 25 stocks for the NEXT 25 yearsIntroduction
The power of an idea
- Electro-Optical Sciences
- Audible - a leader in spoken word content
- Color Kinetics -- lighting the way
- salesforce.com -- on-demand CRM
- Kyphon --the spinal leader
- Opsware -- serving the servers
- California Pizza Kitchen
- Crocs (that's right...Crocs)
- Dick's Sporting Goods
- Chipotle -- the next McDonald's
- Peet's pushing Starbucks out of the way
- Darling is not glamorous
- Movin' on up with MOVE
- Progressive Gaming -- PGIC
- SourceForge -- LNUX
- VistaPrint
- CBeyond
- Wind River Systems
- RealNetworks
- Blue Coat Systems
- SurModics
- Luna Innovations
- DexCom
- Zoltek-ZOLT
- DG Fast Channel (DGIT)
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Reader Comments (Page 1 of 1)
4-28-2007 @ 11:43AM
Mr Bill said...
Instead of 100 invested in each stock, I am "imagining" what 1,000 invested in each stock would have yielded....and my imagination told me that instead of 650,000, it would be 6,500,000. Measured in GDP terms, that would be 1/1000th of .000000000000001% of GDP if my imagination is correct.
4-29-2007 @ 2:06AM
English teacher said...
don't quibble about his hyperbolic math--6.5 million is nothing to quibble about...
4-29-2007 @ 2:42AM
English teacher said...
don't quibble about his hyperbolic math--anyone would be happy to have 6.5 million return on 1000 investment--how many people sold too soon---probably too many to tell---the quibble should be over whether or not the predictions will assay out--who is putting money to the test...
4-29-2007 @ 2:10AM
Vikki said...
don't quibble about his hyperbolic math--anyone would be happy to have 6.5 million return on 1000 investment--how many people sold too soon---probably too many to tell---the quibble should be over whether or not the predictions will assay out--who is putting money to the test...
4-29-2007 @ 2:10AM
Vikki said...
don't quibble about his hyperbolic math--anyone would be happy to have 6.5 million return on 1000 investment--how many people sold too soon---probably too many to tell---the quibble should be over whether or not the predictions will assay out--who is putting money to the test...
5-21-2007 @ 8:55PM
VG said...
In 2006 the US GDP was 13.2 trillion. Therefore 6.5 million / 13.2 trillion is equal to 6,500,000 / 13,200,000,0000,000 = 0.000000492. This would equal one dollar for every 2,030,769 dollars. Make sense?