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18 Apr 2012

Investing for growth, without all the risk Featured

Real fast, now.  Name the company whose stock has appreciated the most in the almost 25 years since the ’87 crash.  (And I’ve already given you a hint.)

High Growth Tech

The stock that’s been the apple of the eye of many investors, Apple (AAPL), springs to mind.  And properly so.  Over that period of time, Apple’s stock has grown in value over 5,500 per cent.  Microsoft (MSFT) hasn’t done too badly, either, with stock price growth of almost 10,000 per cent.  Those both are investments we’d all like to say we’ve owned for the last quarter century, considering that the S&P 500 index only appreciated about 500% during that stretch.

But if either Apple or Microsoft was your fast answer, you’d be wrong.

 

FAST's Stock Growth

The company with the greatest stock price appreciation, nearly 39,000 per cent, over that period is a seller of nuts and bolts and washers and thousands of other little things that hold our world together and helps others make things.  That company is Fastenal and its ticker is FAST.  Along the way, they’ve also paid out a decent share of their earnings to shareholders, a return that isn’t included in that whopping 39,000 per cent gain. 

As they say, past results are no guarantee of future performance.  When I’m ready to plunk down dear cash on an investment I do try to think about the future.

Stock Market Darlings Worth the Risk?

Do I want to invest in a technology company when I know that technologies, and consumer appetites for technologies, are evolving at an ever-faster rate?  Do I want to invest in a company whose future success is dependent upon inventing and rolling out two or three really successful new products each year?  Do I want to invest in a company that, by the very nature of its success, invites competition from other behemoths in highly competitive markets?  Do I want to invest in a company that, because of its successful marketing in the past, invites government scrutiny at every turn?

Or do I want to invest in a company that doesn’t need to re-invent the wheel every year?  Do I want to invest in a company that competes in a niche that doesn’t attract much serious competition – who have you ever heard of that’s said they want to start a company selling nuts and bolts?  Do I want to invest in a company whose product is absolutely essential to the building of pretty much everything we build?

Slow and Steady For Me

On balance, I’m a nuts and bolts guy when it comes to investing.  I’ll never catch an Apple or a Google at the beginning or at a bottom.  The thought of investing in a situation that depends upon technologies that I probably can’t ever understand or consumer tastes that are not predictable doesn’t excite me.  Way too risky for me.  I’ll never be able to tell my Apple or Google or Facebook story at a cocktail party.  But I might have a chance to tell my Fastenal story.

I’m reminded of the fabled race between the tortoise and the hare.  Sometimes the tortoise is a FAST kind of company.

growth stock

Last modified on Monday, 23 April 2012 22:12