The Strategist

Stocks that now worth three hundred times more than 30 years ago


02/17/2017 - 14:48



If you had invested $ 10 thousand in one of these stocks in May 1986, you would have received at least $ 3.68 million by now. Yet, this does not mean that this train has left the station. Which companies are worthy of attention right now?



Any investor dreams to buy stocks of a new Apple or Johnson & Johnson when they are released, and watch the company growing and becoming a leader in its industry. Unfortunately, this does not happen often. Furthermore, when investors find such a treasure, it is rarely possible to wait for the company to come to maturity.

Today, all kinds of information are available upon request. Long-term investment is gradually losing popularity in the age of Internet and algorithmic trading. Yet, old fashion of investing still proves to be good enough. Below-mentioned companies turned a couple of thousand dollars in millions for 30 years in total. 

Balchem

$ 10 thousand into 3.68 million, yield 36 784%.

Most likely, the majority of investors have never heard of Balchem. The company's capitalization remains average even after such a fantastic growth.

Balchem produces animal feed and nutritional supplements for animals, food flavors, special ingredients for industry and pharmaceutics. Balchem owes his prosperity to innovation (and a modicum of luck). Wall Street Journal wrote that the company faced serious problems in the late 1990s as new technology of manufacturing food additives was unprofitable. Fortunately, the company’s management and staff were able to double production, saving costs at the same level, and have found new channels for sales of existing products.

Currently, Balchem’s assessment seems quite fair, if not expensive. After all, this is what you receive after such an incredible growth. The company’s value of stocks is 31 times higher than the profit forecast for the year, so the company needs to maintain sales at a high level to justify confidence of investors.

Monster Beverage

$ 10 thousand into 5.09 million, yield 50 843%.

Monster Beverage’s success is also obliged to innovation. Since May 1986, value of its stocks soared almost 510 times high thanks to popularity of energy drinks, produced by the company.

Monster has earned almost $ 3 billion over the past 12 months. Bulk of the gains came from sale of energy drinks. For comparison, the company's revenue amounted to only $ 606 million in 2006. This, however, does not mean that Monster never faced problems in its wake. In 2012, the US FDA conducted an investigation of five deaths allegedly caused by consumption of Monster drinks. Demand fell for a while, yet, the sales statistics shows that problems were forgotten soon.

In 2014, Monster’s gross annual margin jumped from 54.4% to 62.8%, while net profit doubled in the past three years. Monster Beverage can’t be called cheap after such a growth. Now, its price of share is 30 times higher than expected profits, but, unlike Balchem, the company is fully capable to continue to grow double-digit pace. Most likely, development of Monster will slow in the future, but it’s a great opportunity for investors right now.

Microsoft

$ 10 thousand into 6.47 million, yield 64 633%. 

Papers of technology giant Microsoft rose by more than 646 times over the past 30 years. It is easy to understand reasons for Microsoft's success. Despite numerous attempts of other players to oust the company from the operating system market, Microsoft maintained its stand. 

Microsoft remains the dominant player in the market for PC operating systems. Free cash flow annually brings $ 23-26 billion to the company thanks to high operating margin. In addition, recent acquisition of LinkedIn social network opens up new opportunities for development and earnings. According to forecasts, average annual growth of earnings per share will exceed 10% by the end of the decade, which is a great opportunity for patient investors. 

source: fool.com




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