on to learn more about why he chose these valuable stocks.
- Priceline (Nasdaq: PCLN) 10-year return, 5,118%
Gardner originally recommended Priceline in the spring of 2004. The “name your own price” travel website operator wasn’t a prestigious Fortune 500 company at the time. It was just a company behind a site that was resonating with penny-pinchers seeking travel bargains.
“I think it’s a good small-cap grower that has risen from the graveyard of broken Internet dreams … for existing investors, whom I expect to be rewarded anyway because the company is a strong performer in a growing industry,” he said in 2004.
Priceline was growing, but the real key to its eventual success was snapping up potential disruptors. It made a big international push by acquiring Europe’s Booking.com in 2005 and Asia’s Agoda in 2007. It bought Kayak, the site that scours several travel portals to offer up the lowest prices, in 2013. These deals and several more helped make Priceline more than just a site where folks had to name a price for discounted travel.
—Total return to investors (10 year, annualized): 47%
2. Netflix (Nasdaq: NFLX) 10-year return, 2,843%
There will be more than 74 million Netflix streaming subscribers by the end of the year, but that certainly wasn’t the case in 2004 when Gardner singled it out. At that point, Netflix was merely mailing out DVDs in its signature red mailers.
The company didn’t roll out streaming until 2007, and even then, streaming was a platform that was slow to take off. Yet Gardner saw the early glimpses of a disruptor. Netflix upended traditional video rental stores at first, and then took the lead in streaming, making a big bet on the way we would eventually come to consume television.
“The primary catalyst I see for this stock,” Gardner said in 2004, “is recovery from a general misunderstanding. NFLX is still down more than 50% from its 52-week high due to a general perception that the company isn’t making money and concerns about competition from Blockbuster and Walmart. That kind of misplaced skepticism is one of the biggest blocks of genetic code for my stock market successes.”
— Total return to investors (10 year, annualized): 39%
3. Apple (Nasdaq: AAPL) 10-year return, 1,094%
The world’s most valuable consumer technology company wasn’t that way a decade ago. There was no iPhone; that came in 2007. The iPad didn’t usher in the tablet era until 2010. All that Apple had a decade ago was the red-hot iPod and sluggish Mac sales.
A lot has changed, of course. These days, the iPhone makes up the bulk of Apple’s revenue. Investors may not like to see Apple have all of its eggs in the iPhone basket, but it’s always rolling out new products. That’s the perk of buying into an innovator.
Gardner recommended Apple in early 2008, just months after the original iPhone hit the market. He even called Apple eventually releasing additional products like the iPad and Apple Watch.
“Apple maneuvers like a much smaller company,” he said then. “World-class management and unparalleled products make this one worth owning, and reasonable projections of future cash flow based on current product lines suggest solid returns are ahead. But will Apple really just be selling its current products five years from now? I can’t imagine so.”
— Total return to investors (10 year, annualized): 38%
4. Celgene (Nasdaq: CELG) 10-year return, 623%
Biotech stocks have been feast or famine for investors, but Celgene has been a winning stock for investors. Celgene tackles blood cancer, a tough but promising industry in healthcare.
Celgene has been profitable in all but one year over the past decade. That’s another good sign that it’s not as risky as volatile health sciences upstarts.
“Few can rival Celgene in short-term opportunities,” Gardner said in 2013. “Management expects to more than double revenue, to $12 billion or greater, by 2017, with earnings per share of $13 to $14. I believe there’s significant upside to these targets with further success in the clinic and good uptake of new drugs. But just meeting these goals should reward shareholders nicely.”
Although he only recommended Celgene in early 2013 and hasn’t been able to see a full 10 years of performance, his recommendation has still outperformed the S&P 500 by nearly 80% since then.
— Total return to investors (10 year, annualized): 32%
5. Salesforce.com (NYSE: CRM) 10-year return, 927%
The fifth-best performer over the past decade among Fortune 500 companies – and another stock Gardner recommended early – is Salesforce. The company that revolutionized enterprise software by offering it cheaper on the cloud was recommended to Motley Fool subscribers in early 2009.
Cloud solutions that are truly portable and cheaper to support make perfect sense. Everyone’s on the cloud these days, but Salesforce has made the most of its head start. Gardner saw the early potential of that trend, and this company, when he wrote that “top dog and first mover in online CRM is also an emerging juggernaut in corporate cloud computing. Salesforce outperforms even Google in turning research and development investments into returns for shareholders.“
— Total return to investors (10 year, annualized): 30%
The next decade of winners
The debate is on as to where the winners of the next 10 years will come from, but Gardner has just recommended an up-and-coming company that could be a contender. Just click here now to see his recommendation