Some investors get lured into high-risk investments being told that they can make 1000%+ returns. Many times, these so-called opportunities are in very-small obscure companies, risky meme stocks, or esoteric private investments with limited or no track record.
What’s interesting, is that it was possible to earn 1,000% over the last 10 years and you didn’t have to sell your soul to the devil to do it. Nor did you have to be invested in one of the FAANG (Facebook, Amazon, Apple, Netflix, Google) companies. And yes, if you were invested in these companies and held for the last 10 years, you would have done quite well. But these were not the only companies that did well.
There were opportunities abound in all sorts of companies with historically strong fundamental track records. Many of these companies are household names.
Can you believe that Domino’s pizza generated a 2,120%+ return over the last 10 years? In fact, this beats Amazon’s 1,760% return? So, let’s put this into real terms, $10,000 invested in Domino’s 10 years ago is now worth over $220,000.
How about investing in a wholesale pool distribution company that dramatically out-performed Netflix? Pool Corp did just that, they turned $10,000 into $183,000 vs. Netflix’s $136,000.
Would you think that Mastercard or Visa would have outperformed Apple over the last 10 years? Well, they both did. Mastercard turned $10,000 into $144,000, Visa grew to 131,000, and Apple $130,000.
So the next time you read an article or a friend talks about some unknown company with unproven technology that suggests there is a huge opportunity, you might pause and think about all the risk that comes with investing in something you don’t know or don’t understand. Then consider researching companies you are already familiar with that have a long runway in front of them and realize the future returns can be quite substantial, and I would argue, less risky.
Below is an abbreviated list of some of the other companies that generated outsized returns for their investors over the last 10 years.
- The Home Depot – 1,000% return
- Moody’s Corporation – 920% return
- NVIDA – 4,600% return
- United Rentals – 1,220% return
- Charter Communications – 1,110% return
- Align Technology – 2,480% return
- Sherwin-Williams – 982% return
- Old Dominion Freight Line – 1,540% return
- Microsoft – 1,230% return
There were 39 companies in the S&P 500 that generated 1,000+ returns over the last 10 years. 38% of which were technology companies, 18% were financial services, 15% were consumer cyclical and 15% in the industrial industry.
So is it possible to generate 100% returns? The short answer is yes.
Is it easy? The short answer is no.
So how do you do it?
That’s where independent research, thoughtful analysis, and maybe just a bit of luck comes into play.
-Paul R. Rossi, CFA
Just so the math is clear, a 1,000% return = 10x your original investment and over a 10 year period which equates to an annualized return of 25.89%. Future Value Formula is FV = PV * ( 1+r )^t