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The Best Twenty-Five Stocks Include Cisco, Microsoft, Best Buy, Etc.

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April 25, 2007

Posted by neillevine

About This Editor: I am a writer. Have been writing for other sites, but expect to do most of my future work HERE! My expertise extends from the esoteric such as burning hydrogen to the unpredictability of the stock market and my writing makes me a jack of all trades and exasperated master of none. I have had some influence over national wildfire and water policy and there are hints of a change in energy policy, BUT as Samuel Goldwyn once said, "A verbal promise is not worth the paper it is written on."

         

AOL Money and Finance has an interesting story about the top twenty-five stocks of the past twenty five years starting with Franklin Resources, BEN, the mutual fund manager of Franklin Templeton Investments. Then comes Danaher, DHR, a maker of industrial measuring tools, Eaton Vance, EV, another money manager, United Health, UNH, a medical insurer, Cisco, CSCO, the router maker, International Gaming Technology, IGT, a slot machine maker, Biomet, BMET, a medical device maker, Microsoft, MSFT, the computer software maker, Best Buy, BBY, the electronics retailer, Oracle, ORCL, the business software vendor, Stryker, SYK, an artificial joint manufacturer, Countrywide, CFC, the mortgage lender, Expediters, EXPD, the freight forwarder, Home Depot, HD, the fix your home supplier, Dell, DELL, the personal computer manufacturer, Robert Half, RHI, the temporary and permanent employment firm, Credo Petroleum, CRED, the natural gas driller, Adobe Systems, ADBE, the software publisher, Precision Castparts, the jet engine component maker, Berkshire Hathaway, BRK.A, the Warren Buffett run investment concern, Smithfield Foods, SFD, the luncheon meat maker, Paxar, PXR, the bar code label manufacturer, Time Warner, TWX, the media conglomerate, Paychex, PAYX, the payroll processor, Harley Davidson, HDI, the motorcycle maker.

The returns for these stocks range from 64,224% for Franklin, BEN, to 17,808% for Harley Davidson, HDI, quite good results if one invested one hundred dollars for twenty-five years.

By way of comparison, one hundred dollars compounded at five percent interest for twenty-five years would grow to $338.60 or 386.6%. At ten percent interest, you would end up with $1,083.50 and at twenty-five percent interest you would get $26,470. For twenty percent the return would be $9,540, all good returns, but at the same time making it clear that the top twenty-five stocks over the past twenty five years have all at least earned an average return of more than twenty percent per year.

So what does this tell you?

That careful investing in the stock market will outperform the interest earned on a bank savings account by a large amount, less the usual risks associated with investing money, a clear example being all the people who were hurt when the internet bubble broke.

On the other hand, the current market appears stable with more upside potential than downside. Take the Dow. With this average approaching a record of 13,000, anyone who bought a hypothetical sample share would be making money since any purchase prior to the record would be at a lower, that is, profitable investing price.

With that in mind, I want to point out that I have favorably covered some of these stocks in previous articles. Take Cisco, CSCO. Way back on March 25, it was $26.19. It still has good prospects. In the same article, I pointed out Dell, DELL, was $22.83. The story here is that Michael Dell has come back and is trying to correct problems that have let Hewlett-Packard and other companies catch up, giving Dell competitive problems. The company has been saying it might take a year to a year and a half to fix things, but any company that makes money gives a better return than a sedentary bank account.

The other stocks I am commenting on are Microsoft, MSFT, which is about $28, but is saying it is going to increase profits by more than ten percent, indicating it still has upside potential.

Best Buy, BBY, has done a good job outperforming competition from Circuit City, CC and RadioShack, RSHK, and has shown a thirty nine percent return on investment over the past five years by emphasizing price and customer service such as home installation.

Home Depot, HD, has been having problems because of competition from Lowe’s and has been saying it might sell its wholesale division to concentrate on its retail home supply business.

To give a clear idea of how these stocks have done since last I quoted them, yesterday, Monday, Cisco closed at $26.33. Dell was $24.79. Microsoft closed at $28.79. Best Buy was $48.44. Home Depot closed at $35.29.