What stocks will make their owners rich over the next generation?

[JAllen]

Every generation has a handful of stocks that make their owners fabulously wealthy, even from small ownership stakes. 

 

 

What are the stocks that will make their owners rich over the next 10, 20, and 30 years?  What stocks will be written about in articles - you know the kind that say "so and so bought $10,000 in this stock 40 years ago and now they're a billionaire"?

 

 

Some past examples:

• Berkshire Hathaway, obviously - 1960s - 1990s
  
• Microsoft - 1980s IPO until late 1990s
  
• Fairfax 1980s - mid-2000s
  
• Coke - forever until forever
  
• Walgreen's - 1960s - now
  
• Exxon - 1960s (or before) - now
  

[no_free_lunch]

TSLA

 

It seems wildly overpriced right now but it will grow like a weed and pivot into new markets.  Valuing it right now is like trying to value Apple pre-ipod.  I don't know the exact path they will take but it wouldn't surprise me if it's a 50x over the next 20 years.  Just a guess of course but I have a small amount in it which should contribute meaningfully to my portfolio if I am right.

[PatientCheetah]

I blame the lack of opportunity to Sarbanes Oxley/the rise of late stage VCs/the lack of antitrust vigor/and the shortened price discovery process. MSFT was at one point a microcap. Disney was traded on pink sheets. Many great companies used to take many years to become recognized instead of being priced to perfection right out of IPOs. In the name of protecting the public, our politicians also deprived us of some of the potential tickets to riches and enriched many accountants and lawyers in the process.

[no_free_lunch]

PatientCheetah,

 

From what I understand that will change a bit once the JOBS act goes through:

 

There is another democratizing principle to the JOBS Act, which is not yet active but expected to go into effect before the end of the year. Per 1933 securities legislation, private companies were legally restricted from marketing stock to anyone but "accredited" investors -- defined as "as an individual with an income in excess of $200,000 per year, or a couple with a joint income of $300,000 in each of the last two years, or an individual with a net worth exceeding $1 million, either individually or jointly with a spouse." Limiting buyers to "accredited" investors obviously also perpetuates the "old boys' network" -- only rich people hear about deals and the common person would miss out on the chance to invest in promising companies. Title III of the JOBS Act will let everyday, non-accredited people invest online into private companies in small amounts like $1,000 to $5,000.

[Daytripper]

 

Some past examples:

 

    Berkshire Hathaway, obviously - 1960s - 1990s

    Microsoft - 1980s IPO until late 1990s

    Fairfax 1980s - mid-2000s

    Coke - forever until forever

    Walgreen's - 1960s - now

    Exxon - 1960s (or before) - now

 

TSLA was also mentioned, with a caveat regarding valuation, citing Apple during the pre-iPod era.  I don't disagree with TSLA.

 

I think trying to value Apple post-Jobs is going to be just as difficult as it was during the pre-iPod period. The assets are too intangible to be realistically and properly valued.

 

My vote is for Apple.

 

There are 3  known catalysts (New CEO/upcoming stock split/iPhone 6) that could seriously propel the stock price.  I can't understand why Apple decided to split the shares.  The only rationale that I can imagine for the split is because Apple is close to announcing another game-changing technology product or a business methodology/model that completely changes the way an existing business model has operated (past example - media).

[yadayada]

maybe spaceX if it goes to IPO. Maybe Musk will deliver and it will turn into some giant space exploration company and will begin a new giant space race for colonizing. Like 98% of fuel is used for take off. So once they get the moon base! :D Then once he gets price down he can start mining minerals for relatively cheap.

 

Personally I think Hong Kong market is v interesting. I really think there are some company's trading there now that are probably dirt cheap with amazing management. A lot of people are ignoring that market because 'China corrupt and bubble'. But there must be some diamonds in there. And minority shareholders dont have it as bad as those US traded Chinese stocks. There was something posted about this guy emulating buffett with what he did with berkshire. And Chinese seem to have better work ethic in general.

 

Another one is possibly SNMX. These guys have this process for discovering taste molecules that is pretty groundbreaking, which is far ahead of anything else out there. And most of it doesnt seem to be priced in. Even if current thing with pepsi is not a succes, they could possibly discover some kind of natural sweetener. All insiders at least seem to have relatively large % of their networth in this thing.

 

edit: I see Gencorp seems to have this monopoly type position with rocket engines. So If you think spaceX will be a revolution, maybe Gencorp is an indirect bet on that.

 

Interesting on gencorp:

http://www.reuters.com/article/2013/06/16/air-show-gencorp-idUSL5N0ES0ZK20130616

[DTEJD1997]

Hey all:

 

I am almost 100% sure that the 50X & 100X returns are NOT going to be household names and are NOT going to be "sexy" stories.

 

I think some possible candidates might be mining companies that have excellent reserves & excellent management.  For example, NSU, MNDJF, I'm looking at you!  Management must be good operationally, run it like a business AND RETURN CAPITAL TO SHAREHOLDERS.

 

Another possibility might be the guys at Awilco.  Great assets, great operators, WILLINGNESS TO RETURN CAPITAL TO SHAREHOLDERS.  Want to bet they will make an opportunistic purchase in the future at the bottom of a cycle?

 

Another possibility might be sub-prime finance.  Unfortunately, I think that is going to be a HUGE growth area as most people in the USA will become downwardly mobile.  I made a TON of $ with CRMT & NICK.

 

Finally, what about agriculture?  SEB has been a tremendous operator through the years...

[Guest]

TSLA

 

It seems wildly overpriced right now but it will grow like a weed and pivot into new markets.  Valuing it right now is like trying to value Apple pre-ipod.  I don't know the exact path they will take but it wouldn't surprise me if it's a 50x over the next 20 years.  Just a guess of course but I have a small amount in it which should contribute meaningfully to my portfolio if I am right.

 

50x? Unless they buy back a huge amount of shares, that's a $1.3 trillion market cap.

[thepupil]

TSLA

 

It seems wildly overpriced right now but it will grow like a weed and pivot into new markets.  Valuing it right now is like trying to value Apple pre-ipod.  I don't know the exact path they will take but it wouldn't surprise me if it's a 50x over the next 20 years.  Just a guess of course but I have a small amount in it which should contribute meaningfully to my portfolio if I am right.

 

50x? Unless they buy back a huge amount of shares, that's a $1.3 trillion market cap.

 

By my math, if you paid 8x sales (TSLA's multiple on 2014 estimated sales) for Apple in 2000 (pre-iPod), you would have made 14x and 21% CAGR over 14 years. 50X seems a touch optimistic : )

[yadayada]

Another possibility might be sub-prime finance.  Unfortunately, I think that is going to be a HUGE growth area as most people in the USA will become downwardly mobile.  I made a TON of $ with CRMT & NICK.

were talking 50 baggers here. Isnt subprime finance relatively difficult to do on large scale? I know NICK and it seems their strength came from being in a niche and having a lot of knowledge of local area. They did something the larger guys could not do.

[ni-co]

SHLD of course :P

[Hielko]

None of the stocks mentioned here obviously. You can't start with a big and well known name if you want to have a huge amount of growth.

[sethatk]

I like UPL, as the shift to natural gas should help them long term and they are very efficient operators.

[ni-co]

None of the stocks mentioned here obviously. You can't start with a big and well known name if you want to have a huge amount of growth.

 

SHLDs' market cap is $4.2 bn – that's why I chose it. You need a smallish stock with a huge potential market and therefore upside. AMZN e.g. has $ 140 bn in market cap, WMT $240 bn so that's about 30x to 60x upside – enough room to grow…

[Guest 50centdollars]

I remember reading about when Buffett bought Walt Disney in 1965. He bought 5% of the company and sold it about a year later for 50% gain. He said it was his worst investment ever because if he had left it to today he would have made 1000 times his money not including dividends.

 

You would have to find the next disney or starbucks or home depot to become truly rich.

[DCG]

Boring stocks I guess, but I think Visa and Mastercard still have huge growth potential over the next several decades.

 

 

In the restaurant industry, I think CMG, Noodles & Company, and BWLD have a lot of room for growth ahead.

[rkbabang]

Some past examples:

• Berkshire Hathaway, obviously - 1960s - 1990s
  
• Microsoft - 1980s IPO until late 1990s
  
• Fairfax 1980s - mid-2000s
  
• Coke - forever until forever
  
• Walgreen's - 1960s - now
  
• Exxon - 1960s (or before) - now
  

 

I am almost 100% sure that the 50X & 100X returns are NOT going to be household names and are NOT going to be "sexy" stories.

 

 

I disagree.  Look at that above list.  At least half of them where household names. I'm not sure about Walgreens in the 1960's, but certainly Exxon, Coke, and Microsoft were.  I wasn't born yet in the '60s, but as a kid/teen in the 1980's I had heard of all three. So while some of the stocks that will return 50X in the next 20 years are not household names right now, half of them probably are.

But none of them are obvious right now, else we all would already own it.

 

[DTEJD1997]

Another possibility might be sub-prime finance.  Unfortunately, I think that is going to be a HUGE growth area as most people in the USA will become downwardly mobile.  I made a TON of $ with CRMT & NICK.

were talking 50 baggers here. Isnt subprime finance relatively difficult to do on large scale? I know NICK and it seems their strength came from being in a niche and having a lot of knowledge of local area. They did something the larger guys could not do.

 

NICK did/does operate in a specific niche.  I think if senior management were 15 years younger, they could grown the business quite a bit more.

 

CRMT is still growing and probably has a lot of runway left.

 

I think if you could find a well managed micro-cap subprime finance company with young management, you could get 15-20 years of above average growth and above average returns and be well on your way...

[Partner24]

Plastics.

 

 

[hyten1]

ntdoy :)

 

 

[Daytripper]

By my math, if you paid 8x sales (TSLA's multiple on 2014 estimated sales) for Apple in 2000 (pre-iPod), you would have made 14x and 21% CAGR over 14 years. 50X seems a touch optimistic : )

 

Your point is well-taken.  Past performance may not be indicative of future performance.

[Palantir]

My issue with Tesla is that it is already a 20B firm, and larger in MCap than most car firms, so even if it replaces Mercedes, it will be a 90B firm....which is great, but nothing compared to the MSFT or BRK or AAPL of the world.

 

 

AMZN could be up there. Given its growth rate, dominant position in an emerging cloud market, apex predator CEO etc etc. But again, it is already a 180B firm.

[DCG]

My issue with Tesla is that in 10 or so years all auto manufacturers will be able to produce battery-powered cars, and probably do it cheaper than Tesla.

[Guest longinvestor]

My issue with Tesla is that in 10 or so years all auto manufacturers will be able to produce battery-powered cars, and probably do it cheaper than Tesla.

+1.

[rkbabang]

My issue with Tesla is that in 10 or so years all auto manufacturers will be able to produce battery-powered cars, and probably do it cheaper than Tesla.

 

All electronics companies can produce smartphones and can do it cheaper than Apple.