A Look at the Best Performing Stocks Since the Market's All-Time High
Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
On October 7, 2007 the Dow Jones closed at a record 14,164.53. Obviously we have traded lower since that point, but are quickly approaching several psychological milestones that include new all-times highs. In theory, a stock that has traded with any level of gains since October 2007 has outperformed the market and has been a good investment. But what are the best investments since October 2007, and can those stocks continue their power trade with the market now approaching new highs?
5. Ross Stores (NASDAQ: ROST)
Retail has been about as flat as any space in the market since October 2007, yet the apparel and home fashion company Ross Stores has increased in value by 350% since the Dow Jones’ all-time high. The company has increased its revenue by more than 75% during this period and has more than doubled its earnings. Ross has risen to this degree for one reason: It was cheap and undervalued back in 2007 because of operational fears and inconsistencies. Today, Ross is trading in the middle of its 52-week range but is fairly valued. Therefore, with low double digit growth the stock should return gains on a 10-15% basis; but nothing like the 350% return it’s seen in the last five years.
4. Perrigo (NYSE: PRGO)
Here’s a company that we don’t talk about too often, a major healthcare drug company, Perrigo Company with a 360% return. In this five year period, Perrigo has increased its revenue by 70% and earnings by 200%. Much like Ross, it was greatly undervalued back in October 2007 and its gains have been a result of it appreciating to fair value. The company continues to grow revenue, slightly, and improve its margins. Therefore, the outlook for its next five years is very similar to that of Ross; it’s decent but not extraordinary.
3. Netflix (NASDAQ: NFLX)
Since October 2007, Netflix went from a small company with a big idea to the leader in digital content. It has returned gains of 651% since the market was trading at all-time highs and continues to grow its business in both subscribers and revenue. Back in 2007, Netflix was simply trying to expand in the U.S., but today its goal is to expand with a global presence. This is a company that could very well continue its trend if it can expand globally and control costs. Therefore, unlike Ross and Perrigo the upside is great, although the risk is great as well.
2. Priceline.com (NASDAQ: PCLN)
Over the last five years, Priceline has successfully set itself apart as an internet based services company that has expanded beyond the market’s wildest imagination, with gains of 663%. Back in 2007 investors were concerned that its $1.25 billion in revenue was reaching a max, and that growth could not continue. Now, five years later, the same question remains with over $5 billion in revenue. This is a company that has continuously proved investors and the market wrong, more than doubling its margins when the market thought that margins were tapped. Looking ahead, the company must continue to prove investors wrong and grow throughout the globe. The travel business is large and competitive, yet Priceline does have an advantage of presence and could continue with large gains over the next five years, just not a 663% gain.
1. Regeneron Pharmaceuticals (NASDAQ: REGN)
The no-question winner is Regeneron Pharmaceuticals with a gain of 800% since the market reached all-time highs back on October 7, 2007. The company has gone from a small speculative $2 billion company to a biotechnology powerhouse valued at almost $17 billion. The company has increased its revenue five-fold and is expecting a breakout year in 2013. Some have suggested that the stock is expensive, but because of its Orphan drug status, its valuation is consistent with others in the space. Personally, I think it could be another great year(s) for investors of Regeneron as it grows revenue, develops new products, and exhibits market leading performance. However, with a $16.7 billion market cap, I don’t think the company sees an 800% return over the next five years. Yet consistent gains of 20%-30% are not impossible.
When you look at these stocks, consider what made them move, and their overall performance, you can’t help but to be amazed. These are all companies that had to continuously prove doubters wrong and have excelled while the market traded flat. In my opinion, there is still some value to these five stocks, but investors should perform their own due diligence and make a decision as to whether one or more would benefit your portfolio.
BrianNichols has no position in any stocks mentioned. The Motley Fool recommends Netflix and Priceline.com. The Motley Fool owns shares of Netflix and Priceline.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!