With 2009 behind us and a new decade ahead, savvy investors would do well to study which stocks turned in the strongest performances in the last decade. Throughout the tech crash, 9/11, Hurricane Katrina and the global financial meltdown, a handful of resilient stocks not only held their own amidst adversity, but actually outperformed the entire market from 1999 to the present. Various financial publications have tallied up the winners. Today, we’ll explore how these companies maintained their high share prices throughout the 2000’s, including acquisitions, market forces and well-timed product launches.
Long one of the most lucrative markets out there, the diet and weight loss sector produced the 2000’s top stock in Medifast. According to Motley Fool, Medifast posted an eye-popping 9,244% growth rate from 2000-2009 – over 1,300% more than the second best performing stock during the same time frame. The bulk of Medifast’s success appears to have stemmed from the Medifast diet, a low-fat, low-carb diet plan focused on calorie restriction. Given the soaring popularity of diet programs like Atkins and Weight Watchers during the 2000’s, it is no wonder that Medifast’s products (which span five separate subsidiaries) performed so well.
Green Mountain Coffee Roasters (GMCR)
The 2000’s were a decade for the ages for caffeine juggernaut Green Mountain. BusinessInsider reports a whopping 7,895% growth rate for the decade, and Vermont’s Burlington Free Press said it all: “…if you bought stock in Green Mountain Coffee Roasters a decade ago, you’re sitting pretty today.” Despite trading at just $1 per share in 2000, Green Mountain propelled itself to the heights of stock market dominance largely on the strength of its, “…2006 decision to buy out Wakefield, Mass.-based Keurig Inc., the company now synonymous with single cup brewing” for a cool $104 million. The deal has made a prophet out of CEO Robert Stiller, who insisted in 2001 that people will still buy good coffee during tough times. Sure enough, Green Mountain is now trading at over $70 per share, with K-Cup shipments up 63% over 2008.
Hansen Natural (HANS)
Another beverage-focused company, Hansen Natural, was the third-best performing stock of the 2000’s. In posting a 6,504% growth rate since 2000, Hansen demonstrated the power of risk management as a growth strategy. Unlike many companies in this space, Hansen is a holding company, carrying no operating businesses of its own other than direct, wholly-owned subsidiaries. In other words, it does not itself produce goods. This low risk/high reward arrangement has enabled Hansen to succeed brilliantly from about 2005 until the present. The company specializes in distributing and marketing energy drinks (including the ultra-popular Monster energy drink), non-carbonated iced teas and fruit smoothies.
Bally Technologies (BYI)
The gambling industry has taken its lumps since the recession began, but Bally Technologies has rebounded nicely after a dip in share price during 2008. Much of Bally’s 6,395% growth during the 2000’s owes to the company’s shrewd acquisitions of Casino Marketplace, MindPlay and Advanced Casino Systems Corporation, which allowed Bally’s to expand its slot machine technology dominance. 2004’s acquisition of Sierra Design Group cemented Bally’s direction as a gaming technology company. While Bally’s had plenty of opportunities to slow down during the last decade, its philosophy of continuously releasing new products has proved to be an effective one.
Southwestern Energy Co (SWN)
Southwestern Energy is proof positive that neither disasters nor terrorist attacks, nor recessions can hold a truly productive company down. The natural gas and oil producer ended 1999 trading at a paltry $0.82 per share, but has risen all the way to $47.45 as of December 2009 – a 5,684% change in share price and a 5,781% total return for the decade. And don’t think for a moment that Southwestern is tip-toeing into 2010 because of the recession. According to BusinessWeek, the company has, “…increased its 2010 capital capital budget and projected a 36 percent growth in production, as the company looks to expand its exploration and production activity in the coming year.” Clues explaining the prolonged success of the company can be found in the very same article, where CEO Steve Mueller opines that Southwestern’s, “…low cost operations, position in the Fayetteville Shale and financial flexibility”, will continue to propel the organization.
Deckers Outdoor (DECK)
Sometimes all it takes is one mega-successful product to send the whole company’s share price skyrocketing. This appears to be the case with Decker’s Outdoor, whose 3,669% growth from 2000-2009 coincides with the soaring popularity of UGG boots. While the Los Angeles Times writes that the late 1990’s spike in demand, “…should have been just another fad”, the company had nevertheless, “…sold more than $212 million in products” by the third quarter of 2009. Reflecting further on the driving forces of Decker Outdoor’s rise to prominence, the LA Times credits the company’s late-90’s decision to switch, “…the primary focus of the footwear company to the international market” as the catalyst, concluding that, “…what stared as a small enterprise to clad the feet of Australian surfers now seems intent on world domination.”
Plain and simple, Amedisys has ridden the seemingly bottomless pit of taxpayer money for Medicare to a spot on the best performing stocks of the 2000’s list. As a provider of home health services to the, “…chronic, co-morbid, aging American population”, over 85% of Amedisys’ 3,669.2% growth from 2000-2009 has come from Medicare, according to BusinessInsider. It appears this is a company that was in the right place at the right time: operating amidst a rapidly swelling aging population and a government program no politician will dare to starve for funds. Skeptics need look no further than this graph showing Amedisys’ share price hovering below $20 per share until then-president Bush’s medicare reform became law in late 2003.
Jos. A. Bank Clothiers (JOSB)
Anyone who listens to talk radio has heard adverisements for Jos. A. Bank, a designer, retailer and marketer of mens clothing. BusinessInsider recently named the company in its list of the best performing stocks of the decade, citing Jos. A. Bank’s 3,419% growth from 2000 to the present. This stock did not begin to really heat up until late in 2003, when it began an ongoing and rarely interrupted climb in share price. Perhaps most interesting of all is the fact that Jos. A. Bank has performed better during 2009, in the teeth of the recession, that at any other time during the 2000’s. Perhaps the rising unemployment rate has inspired job seekers to put their best foot forward by stocking up on new professional clothing.
Terra Nitrogen (TNH)
Sometimes the way to achieve a high share price is to satisfy a high-demand niche better than anyone else. Such was the road taken by Terra Nitrogen, a nitrogen fertilizer producer and distributed that posted 3,611% growth from 2000-2009. Under the guidance of CEO Michael Bennett since 1998, Terra has averaged a 70% return on capital since 2006. According to Motley Fool, continued deterioration of soil has elevated demand for Terra’s fertilizer products. There’s no mystery as to Terra’s success. As one Motley commenter succinctly puts it, “…people need to eat.”
XTO Energy Inc. (XTO)
CNBC‘s Best & Worst Stocks of the Decade gave high marks to XTO Energy, which parlayed two big late-2000’s acquisitions into a $31 billion sale to Exxon Mobil this year and 3,461% in returns during the decade. XTO spent $2.5 billion to acquire more than 1 trillion cubic feet of oil and gas reserves in the Rocky Mountains, Texas and southern Louisiana from Dominion Resources in 2007. A year later, XTOforked over $4.2 billion for Hunt Petroleum Corporation in a move that bolstered the company into the position of largest natural gas producer in the U.S. by the second quarter of 2009.
DaVita Inc. (DVA)
On December 31, 1999, Davita Inc. closed at less than $5 per share. As of December 18, 2009, however, DaVita (one of the largest kidney care companies in the U.S.) had leaped to $59.60, earning its place as one of the best stocks of the decade. All told, this represents a 1,236% in share price, good for a total 1999-2009 return of over 1,200%. Naturally, a decade of such robust performance demands explanation. According to Fortune, DaVita appears to owe much of its success this decade to exemplary corporate leadership. The company was named one of Fortune’s 25 Top Companies For Leaders after being, “…selected and ranked by an expert panel of independent judges based on strength of leadership practices and culture, examples of leader development on a global scale, impact of leadership in communities in which they operate, business performance and company reputation.”