Friday, August 31, 2007

How Foolish Are You?

AN IDEA FOR A SLOW DAY
If you are a small-cap or micro-cap investor that takes the time to conduct proper research and due diligence into finding your next great investment, than you will be extremely happy to read this article from The Motley Fool.

Why? Of the 10 best performing stocks over the past 10 years, 9 of them began their runs as companies capitalized at less than $200 million. I took the time to do some math and calculated the following astonishing facts:

  • Their average market cap is a mere $110 million.
  • If you backout the largest company in the group at the time, the average market cap falls to 64.7 million
  • 3 companies had a market cap of $10 million or less - as low as $3 million


You would expect to see names like Dell, Apple, Starbucks, etc. but they are nowhere to be found on the list. Nope, the best performing stocks started out as obscure and ignored little companies that received no attention of any kind from analysts and brokers.

There is a great lesson to be learned here. Search for companies that have achieved market acceptance for their innovative products and services, have a solid management team, reasonable share structure, a good investor relations firm (had to say it and are relatively ignored by the “experts”.

At CFRN WE’RE finding great little companies and telling our listeners about it.

Hopefully, one our companies can make this list in the next 10 years. In the meantime, here is the current list - see any names that you recognize and may have skipped over?
Company 1997 Market Cap Return, 1997-2006
Hansen Natural HANS $10 million 25,538%
Chico’s (NYSE: CHS) $34 million 8,773%
American Eagle (Nasdaq: AEO) $78 million 7,884%
Daktronics (Nasdaq: DAKT) $17 million 7,328%
Celgene (Nasdaq: CELG) $111 million 6,118%
4 Kids Entertainment $3 million 5,447%
NVR $191 million 4,871%
Comtech Telecommunications $7 million 4,653%
Best Buy (NYSE: BBY) $460 million 4,082%
Frontier Oil (NYSE: FTO) $85 million 3,616%


*Data provided by Capital IQ.

CT's Triple Crown - Azco Mining AZMN, HealthSonix HSXI, Nettel Holdings NTTL

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