In the Rule Breaker Investing podcast, the original 2015 stock sampler “5 Stocks for the Next 5 Years” is reviewed, covering a mix of Latin American e-commerce, rural convenience, gaming, cybersecurity, and kitchen tech. Longtime Fool Rick Munarriz joins David Gardner to discuss the performance of these stocks over the decade.
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Join the Rule Breaker Investing podcast as David Gardner and Rick Munarriz reflect on the 2015 stock sampler “5 Stocks for the Next 5 Years” 10 years later. Explore the successes, failures, and lessons learned from these diverse stock picks. Don’t miss out on the insights for your own investment journey. In 1997, a stock was up 1371 times, sparking excitement among investors. The stock prices fluctuated since then, with some stocks falling while others like Shopify and Salesforce rise. David Gardner’s book, Rule Breaker Investing, receives high praise from investment experts like Igor. The first episode of 10 Years Later features Rick Munarriz discussing past stock picks and their performance. The episode kicks off with Activision Blizzard, a gaming company that saw significant growth in the past decade, leading to its acquisition by Microsoft at $95 a share. Video games are more popular than movies, leading to a rise in top tier publishers like Activision. The company’s success was driven by strategic acquisitions, leading to hit franchises like Call of Duty and Candy Crush. After being acquired by Microsoft in a $69 billion deal, Activision Blizzard ceased to exist as a standalone company.
Activision Blizzard was a successful investment, with a total return of 234.9% before being acquired by Microsoft. The company’s diverse portfolio of games attracted investors and ultimately made it an appealing target for acquisition. Despite no longer existing as an independent entity, Activision Blizzard left a lasting impact on the gaming industry.
Activision Blizzard’s success was due to its ability to create a wide-ranging catalog of games that appealed to gamers of all ages and platforms. The company’s strategic acquisitions and innovative game development helped it build a strong presence in the gaming industry, ultimately leading to its acquisition by Microsoft. The company’s CEO played a key role in its success. Bobby Kotick, controversial CEO of Activision Blizzard, praised as a great entrepreneur by some. Known for huge value creation in the video game industry, with appearances in movies like Money Ball. Despite controversy, admired for business acumen and value creation in the gaming world.
Casey’s General Stores, a seemingly ordinary convenience store chain, surprises with its success over the past decade. Expansion to 2,658 stores and entry into new markets like Texas show growth potential. Strong consumer appeal, particularly for its pizza, has led to market-crushing performance with a 373% increase in stock value. A hidden gem in the convenience store sector. Casey’s General Stores has seen its stock price quadruple over the last decade, outperforming the market averages. The company has evolved from focusing on fuel and cigarette sales to offering high-quality pizza and coffee. Its gross profit from inside the store business now nearly doubles its fuel business.
FireEye, now part of Alphabet, originally specialized in breach detection hardware appliances. The cybersecurity company merged with Mandiant, known for forensics and Intel. Google eventually acquired Mandiant and integrated its expertise into its own Cloud offerings. The evolution of cybersecurity threats has shifted focus from nuisance-level to nation-state concerns. FireEye, now Mandiant, failed to navigate through shifting cybersecurity demands, selling off parts after a lackluster performance. The stock, purchased at $37.47 a decade ago, now holds an effective cost basis of $182.10 in Alphabet, yielding a paltry 16% return compared to the market’s 223% gain.
Despite a bullish industry outlook, FireEye/Mandiant underperformed, with Alphabet emerging as the clear winner. The cybersecurity sector remains promising, but perhaps sticking with top dogs like Alphabet from the start would have yielded better results. Mercado Libre, dubbed the “Amazon of Latin America,” shows promise with its marketplace, payments, and logistics services mirroring Amazon’s global success. Marcos Galperin, founder/CEO of Mercado Libre, has transformed the company into a powerhouse in Latin America. Revenue mix has shifted, with Mercado Pago generating four times more volume than e-commerce. Net income has surged 20-fold, revenue up 40-fold since 2014. Stock picked 10 years ago soared 2,069%, outperforming market by 2,069%.
Mercado Libre has been a standout performer, up 2,069% in 10 years, crushing market averages. David Gardner’s pick at $109 in 2011 now sits at $2,384, a 21-bagger. With Mercado Libre leading the way, Rule Breakers service has seen numerous successes. Winners like these keep winning, creating life-altering wealth for investors. Middleby (M-I-D-D) is a leading provider of kitchen technology for restaurants, boasting a 27% return over the past 10 years. However, the company has underperformed in recent years due to CEO turnover and macroeconomic challenges in the restaurant industry.
Former CEO Salim Basle’s departure may have contributed to Middleby’s recent underperformance, as his strategic acquisitions drove the company’s success in previous years. With 81% of its business focused on commercial food service, Middleby has felt the impact of restaurants struggling and more people working from home.
The company’s balance between commercial and residential sales has been affected by the real estate market and high borrowing costs. While Middleby continues to grow and make strategic moves, its stock has failed to appreciate as an investment, leaving investors disappointed with its lackluster performance in recent years.
Despite its storied history and treasured brands like Viking, Middleby’s stock has fluctuated between $120 and $170 in the past year, with a Market Cap of $6.9 billion. Once a monster stock in the early 2000s, Middleby has faded from investor awareness and failed to recapture its previous success. Middleby stock has moved towards obscurity in recent years, despite doubling revenue and earnings in the past decade. Growth has slowed, with only two years of double-digit growth in the last six or seven years.
The 5 Stock Samplers series reflects on the past 10 years, with mixed results. The blended S&P 500 return for the stocks is up 544.1%, outperforming the market. CEOs play a crucial role in stock performance, with visionary leaders driving success.
Investing in disruptive stocks can lead to buyouts, offering investors a nice premium. Embracing buyouts as part of the investing strategy can lead to new opportunities and potential for growth in the future. There will always be new Rule Breakers and opportunities for investors to explore. In a recent podcast, David Gardner and Rick Munarriz discuss the success of Marvel as part of Disney and the importance of long-term investing. They review a 5 Stock Sampler from 10 years ago, highlighting Mercado Libre as a standout with over 20 times growth. They also discuss favorites like Middleby and Casey’s General Stores, but both agree on Mercado Libre’s continued potential. Overall, they emphasize the importance of letting winners win and having a long-term vision in investing. They also touch on the transformation of companies like Activision Blizzard and FireEye, now part of larger entities like Microsoft and Alphabet. The discussion showcases the value of holding onto high-performing stocks and trusting in innovative companies like Alphabet and Mercado Libre for long-term growth. David Gardner and special guest Rick Munarriz discussed the importance of long-term investing on a recent podcast. Both have positions in Alphabet and Apple. The Motley Fool also recommends other tech and retail stocks. Their engaging discussion emphasized the value of investing for the long haul. Tune in to learn more about their insights.
Read more at Nasdaq: A Motley Fool 5-Stock Sampler 10 Years Later