Last Monday was a happy 20th birthday for Alphabet (Google) shareholders.
Since going public in August 2004, the shares have returned over 7,500 per cent – not bad, and a number that will confound the many critics in 2004 who saw Google as a hyped-up, expensive stock.
Just 11 S&P 500 stocks have outperformed Google, notes Bespoke Investment, a small list that includes other tech giants like Nvidia, Apple and Amazon. However, investors looking for tomorrow’s biggest winners shouldn’t assume they will be tech stocks.
Prof Hendrik Bessembinder’s famous research into the biggest winners in market history shows tech stocks have been “more likely to appear on a list of the worst rather than best performers”, accounting for almost a third of the worst performers. Bessembinder’s latest paper shows cigarette maker Altria (formerly Philip Morris) has been the biggest winner of the past century, gaining 265 million per cent, or 16.3 per cent annualised.
Altria is followed by unheralded names like construction firm Vulcan Materials and Kansas City Southern. It’s true that over the past few decades, the biggest winners contain various well-known tech names. Outside the top 10, however, you find a diverse list, containing stocks like Visa, JPMorgan, Walmart, Nestle, ExxonMobil, Johnson & Johnson, and so on.
In other words, investors looking for the next Google should remember winners often come from unexpected places.
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