Let’s go back to the year 2009. In January, Barack Obama was sworn as the 44th President of the United States. In April, three Somali pirates are killed freeing Captain Philips and ending a multi-day standoff between the United States Navy and the pirates. Later the event is made into a movie. In November, the New York Yankees defeat the Philadelphia Phillies to win their 27th baseball World championship (their last one).
So if you could go back to invest money in any large U.S. company stock (a piece of ownership in the company) in December 2009, what would you have invested in? As in, what was the top performing U.S. S&P 500 stock over the last decade? (Specifically, from December 31, 2009 until December 5, 2019)
Please answer in the form of a jeopardy question…..
Would you have guessed that it was Netflix Inc.?
I am sure some of you did. With the quarantine in place, the well-known company became a household name. The stock earned an annualized 44.12% during the 10 years ending in December 2019. Thus, a $100 invested in the stock in would have been worth $3,867.
However, after the first spot, the company names get harder. Well-known in the financial industry, MarketAxess Holdings came in second place earning an annualized return of approximately 41%. This fintech company operates a global electronic bond trading platform, vastly improving the process for investors who traditionally traded bonds “over-the-counter”.
I would venture to guess that no one would have been able to name the rest of the spots until number 10 – Amazon. The type of industries that the companies operate in also dealt in 6 different sectors.
In third place, healthcare technology company Abiomed develops medical devices that provide circulatory support. The company’s Impella® device—the world’s smallest heart pump— has been used to treat over 50,000 U.S. patients.
Fourth place company TransDigm Group gains its stronghold by developing specialized products for the aerospace industry. It has a strong acquisition strategy as well, having acquired over 60 businesses since its formation in 1993.
Below is the rest of the Top 10 list with the Final Value of the $100 investment, and the industry sectors.
|Rank||Company||Ticker||Final Value of $100 Investment||S&P 500 Sector|
|1||Netflix Inc.||NASDAQ: NFLX||$3,867||Communication Services|
|2||MarketAxess Holdings Inc.||NASDAQ: MKTX||$3,282||Financials|
|3||Abiomed Inc.||NASDAQ: ABMD||$2,221||Healthcare|
|4||TransDigm Group Inc.||NYSE: TDG||$2,165||Industrials|
|5||Broadcom Inc.||NASDAQ: AVGO||$2,019||Information Technology|
|6||Align Technology Inc.||NASDAQ: ALGN||$1,558||Healthcare|
|7||United Rentals Inc.||NYSE: URI||$1,534||Industrials|
|8||Regeneron Pharmaceuticals Inc.||NASDAQ: REGN||$1,530||Healthcare|
|9||Ulta Beauty Inc.||NASDAQ: ULTA||$1,333||Consumer Discretionary|
|10||Amazon.com Inc.||NASDAQ: AMZN||$1,309||Consumer Discretionary|
While these stocks have performed extremely well over the last decade, they are not likely to perform at the top again. Some companies may have become overvalued, or be facing new competition in their industry—as is the case with Netflix. Many large entertainment firms such as ViacomCBS and Disney are aggressively investing in this space.
The key to capture the next decades “market out-performers” is to diversify in the entire available trading universe. Once this is accomplished, you need to have a strategy of buy-and-hold to capture the long-term returns. If you’re lucky enough to identify a winner early on, it’s possible to simply sit back and let your dollars grow.
What companies will emerge in the 2020’s and be on the Top Ten list? I do not know, but I do know that we already own the company stock in our clients’ portfolios.
Hope you have a great week!
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List Criteria: To compile the list, MarketWatch reviewed the current S&P 500 constituents and excluded any stocks that have traded in their present form for less than 10 years. The remaining companies were sorted based on their total return, with reinvested dividends, from December 31, 2009 to December 5, 2019.