David Gardner, co-founder of Motley Fool, started stock picking and messaging on AOL (AOL) in August 4, 1994. Every good and bad pick was scored and recorded since that time, nearly 20 years ago. [The Motley Fool (http://www.fool.com/) offers premium advice, newsletters, and other services for investors.]
The Fool featured an interview with Gardner, in which he offers invaluable insight on investing. His attitude: investing is about keeping a score and is about constant learning. At around the 9-minute mark of the interview Gardner mentions ground-breaking leaders, along with searching for small-caps in niches. AOL in the 1990’s is an example. These picks contrast with large-cap companies that are in say, 4th place.
Gardner thinks human-judgement will be the edge investors need to beat the performance of HFT investing. It is no secret that trading volume from individual investors is down, and that machine-based trading volume is increasing. Qualitative things will matter more than P/E alone. Investors will need to evaluate the people and businesses.
About 52-Week Highs
The best stocks will keep hitting new highs for a long period of time. Gardner thinks companies hitting new stock price highs are a good thing. Instead of being fearful, investors should embrace it. Buffett famously believed that investors should be fearful when others are greedy. In this case, Gardner is referring to rising stocks being rewarded for an ever-growing business. So long as the business grows, the stock price will move with it.
Back in the day, AOL was rated over-priced by “experts” and was even mentioned as such at a meeting of the minds for two consecutive years. Barron’s also covered the overvaluation in internet stocks, well-before AOL dropped. AOL went on to become a 100-bagger.
3 Things Gardner Looks For:
Gardner says he:
1) Looks for company changing world in positive ways
2) Looks for people in company with confidence
3) Follows a Peter Lynch-like way: enjoys learning about the company
Gardner says to be comfortable being right just 6 or 7 times out of 10. Sometimes picks may lose 60% or 100%. Investors need to be comfortable with these odds, and these losses. Gardner currently owns 42 stocks across all portfolios.
Gardner’s audience covers 3 types of investors:
1) Focus investors
3) Buy-it-all investors
Business Section: Investing Ideas
Companies mentioned by the Motley Fool Co-founder are listed below.
Amazon at $3 was a very good buy despite its overvaluation at the time, and went on to produce spectacular returns. The company is currently at a 52-week high. Amazon reports on January 29, 2013. Investors will need to review the impact of the sales tax now being collected in various States.
Gardner once tweeted about Facebook. He felt (1) world was too against the stock after it dropped 50% from its IPO price. The achievement was not recognized, including the billions raised. (2) The business model is accurate: the world sees Facebook as what it is, not what it can become. He points to these quotes:
Talent hits a target no one else can hit. Genius hits a target no one else can see.
This quote helps for investing. Investors need to look for “genius.” For example, twitter looked silly when it started, but its business model is growing.
(3) Facebook conformed to the 6 traits of Fool rule-breaking. Gardner thinks Facebook will be one of the few social networks that will survive. LinkedIn (LNKD) is another.
3. Apple Inc. (AAPL, Earnings, Analysts, Financials): Designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. Market cap at $483.52B, most recent closing price at $514.01.
Apple has a great culture, lots of cash to become what it wants to be, and the resources to operate innovatively. The company also has tremendous brand value.
Gardner notes that the above-named stocks are just one of many stock picks.
4. 3D Systems Corp. (DDD, Earnings, Analysts, Financials) & Stratasys Inc. (SSYS, Earnings, Analysts, Financials). DDD IS engageg in the design, development, manufacture, marketing, and servicing of 3D printers and related products, print materials, and services. Market cap at $3.9B, most recent closing price at $68.35. SSYS is engaged in the development, manufacture, and marketing of three dimensional (3D) printing, rapid prototyping (RP), and direct digital manufacturing (DDM) systems primarily in North America, Europe, and the Asia Pacific. Market cap at $1.89B, most recent closing price at $86.51.
Both 3D printing companies were recommended by Gardner. The phenomenon of this technology has parallels to the growth of Internet.
5. Netflix, Inc. (NFLX, Earnings, Analysts, Financials): Provides subscription based Internet services for TV shows and movies in the United States and internationally. Market cap at $5.74B, most recent closing price at $103.26.
Recommended a decade ago, Gardner likes the management team of the company. He points to Hastings as a reason to continue holding this company. Netflix is up 88% from its 52-week low.
Companies the Fool co-founder did not like were:
Zynga could potentially be a better buy below $2. The company was too dependent on Facebook for growth, and has little meaningful innovation. Zynga games also lacked uniqueness and originality, making it difficult for the company to compete with other game makers.
7. Microsoft Corporation (MSFT, Earnings, Analysts, Financials): Develops, licenses, and supports a range of software products and services for various computing devices worldwide. Market cap at $232.38B, most recent closing price at $27.61.
Written by Chris Lau. Disclosure: Author does not have a position in any of the companies mentioned. The author is also a contributor to the Motley Fool network.
Analyze These Ideas: Getting Starte
- Access a performance overview for all stocks in the list
- Compare analyst ratings for the companies mentioned
- Compare analyst ratings to annual returns for stocks mentioned
- Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, Filings
- Amazon.com Inc. (AMZN, Chart, Download SEC Filings)
- Facebook, Inc. (FB, Chart, Download SEC Filings)
- Apple Inc. (AAPL, Chart, Download SEC Filings)
- 3D Systems Corp. (DDD, Chart, Download SEC Filings)
- Stratasys Inc. (SSYS, Chart, Download SEC Filings)
- Netflix, Inc. (NFLX, Chart, Download SEC Filings)
- Zynga, Inc. (ZNGA, Chart, Download SEC Filings)
- Microsoft Corporation (MSFT, Chart, Download SEC Filings)
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