A Stock Picker's Guide to 100 Booming Companies Thinking about investing in some of these outfits for fun and profit? Read this first.
(Business 2.0) – Let's say you had put $100 into each of the companies on Business 2.0's first list of the 100 fastest-growing when it came out in October 2002. Today, 20 months later, that $10,000 investment would be worth almost $21,000, an annualized return of 60 percent. Sure beats working.
But if you're thinking of treating the B2 100 as a buy list, hang on a minute. Late 2002 was the bottom of the bear market in tech stocks. The entire sector has been on a tear ever since--not just the companies on our list.
More recently, the performance of tech stocks has slowed. Had you bought 2003's companies when the list was published last fall, your $10,000 would now be worth just over $11,000. A 10 percent gain in six months is hardly terrible, but don't forget that the S&P 500 gained 13 percent in the same period with less volatility.
Things get even dicier if you consider individual stock performances. Among 2003's companies was flat-panel display maker Planar Systems (No. 77 this year). It's a fine outfit, but the stock is down 33 percent over the past six months. Even last year's top-ranked company, wireless equipment maker UTStarcom, is off 10 percent. The moral: There has always been a difference between a great company and a great stock.
The smartest way for an investor to use our list is as a scouting report for sectors and companies on the rise. Many small companies, like No. 45 Pegasystems and No. 85 Opnet Technologies, get little press and might fly under many investors' radar. But remember that there are no three-year-old stocks with annual revenue of $50 million (the minimum size to be included in the 100) that aren't on somebody's screen. None. So, please, don't buy anything on the list without first checking it out (see "How to Research a Stock on the Information-Overload Highway," page 137).
And when you do, remember another investment chestnut: Past performance is no guarantee of future results. -- MICHAEL V. COPELAND