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Friday File: Best Picks of the Past 17 Years… Plus a Tale of Two Growth Stocks

Some musings on teaser history, plus a look at the relative valuation of a couple of our growth stocks

Before I get to my main topics today, I should let you know that I’ve been updating our old teaser tracking spreadsheets — which has meant a long trip down memory lane, looking back on old teasers and researching those companies to make sure we keep up with which ones went bankrupt or got acquired, and which ones have had a stock split (or, more often, a “reverse split” share consolidation)… you can browse those old spreadsheets on our Teaser Tracking page if you’re interested. I still have some cleanup to do, especially on the 2007-2010 spreadsheets, but I thought I’d share a few thoughts that came to me as I updated those entries and numbers:

Everyone wants to know the best teaser picks over the past 17 years, so we’ll start there… and with a couple exceptions, including the number one overall pick, that mostly just depends on one question: “When did you buy NVIDIA?”

We calculate returns cumulatively, so many of the best teaser stock picks on record came, no big surprise, in our first decade — I started Stock Gumshoe in 2007, and that was also when the Motley Fool Stock Advisor teased an investment in Netflix (NFLX), a pick which is now up 26,000%, (a compound annual growth rate (CAGR) of 38%). That was a Tom Gardner recommendation, I think, a little surprising that it wasn’t from his usually-growthier brother David — and back then, Netflix was just starting to offer a few streaming shows (it wasn’t called “streaming” yet), and was primarily in the DVD rental by mail business (your friendly neighborhood Gumshoe didn’t bite, sadly, I didn’t have the vision to foresee the potential of streaming at that time… so I’m embarrassed to recollect that I thought Netflix was still a little pricey, at 25X earnings for a fairly slow-growth rental business).

Robert Hsu’s tease of NVIDIA (NVDA) in 2007 also came close, and he was the first to tease NVIDIA for his (now long-gone) Asia Edge newsletter — that one would have returned about 16,000% over 17 years. But that’s “only” 35% per year annualized. When it comes to the best annualized results for anything picked a decade or more ago, we’d have to settle on another Motley Fool pick, when David Gardner teased NVIDIA in 2014, leading to about 25,000% returns… but in that shorter timeframe, that would be a CAGR of ...

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