Finding the Next 100-Baggers

The history of 100-baggers... A surprising big winner... They're out there... Where to look... The things that will never change... Warren Buffett loves energy... Faster, cheaper, better... The great AI race... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] The history of 100-baggers... A surprising big winner... They're out there... Where to look... The things that will never change... Warren Buffett loves energy... Faster, cheaper, better... [The great AI race](... --------------------------------------------------------------- The thrill of a '100 bagger' treasure hunt... I (Corey McLaughlin) have been spending some time lately reading the book [100 Baggers: Stocks That Return 100-to-1 and How to Find Them]( by Christopher Mayer. He was a recent guest of Stansberry Research senior analyst Matt McCall [on his podcast](... The book is an informative and entertaining read that runs through the history of stocks that returned $100 for every $1 invested over the past five decades. In other words, if you bought them and held on, you'd be rich. Chris examined the common characteristics of these stocks and businesses... explained what metrics to look for... and shared about the people who actually spotted them... and how and why they did. I suggest reading it for yourself – and you can watch or listen to Matt's interview with Chris [here](. On the rails... Unsurprisingly, Warren Buffett's Berkshire Hathaway (BRK-B) topped the list of 100-baggers in terms of total returns from 1962 (when accessible data began) through 2015 (when Mayer's book was first published). But the second-highest return of the previous 50 years was from Kansas City Southern. It was a railroad stock whose shares – before the company was bought by Canadian Pacific in 2021 – were up more than 16,000-fold since 1974. A $10,000 investment would have turned into $160 million in 40 years. Who wouldn't take that? But how many folks likely bought Kansas City Southern stock? And of those who bought shares, even fewer likely had the gumption to hold them for 40 years... or even the 18 years it took for the company to return 100 times an initial investment since 1974. If anyone knows someone who did, we'd like to talk to them. As Chris put it in his book... I would never have guessed a railroad stock would top the list. Now, we acknowledge that there are issues around the U.S. railroad system today – like a pursuit of profits at the expense of workers, which we've talked about before. Today's Digest isn't about that... Nor is it about the consistency of U.S. government mismanagement, our sorry debt situation, inflation, or any of the other challenges "We the People" face today. We're also not covering what the Federal Reserve is going to do next, or where the indexes are going. The point is, long-term, 100x returns are out there... Chris found that 365 stocks had returned 100-to-1 from 1962 to 2014. Many of these companies took more than 30 years to see these gains. But some reached that level much quicker. It took toy-maker Hasbro (HAS) about 10 years... retailer Gap (GPS) 11 years... industrial-equipment supplier Pall about 16 years... and fast-food giant McDonald's (MCD) about 19 years. Importantly, the list includes 187 stocks that you could have bought between 1966 and 1982 – during what was perceived as a weak stock market – that could have made you 100x your money. That period bears the closest resemblance to the higher inflation and interest-rate environment we expect ahead. I'm talking about names like Southwest Airlines (LUV) and H&R Block (HRB). These aren't the sexiest companies around, but they shared common traits in how they operated and created long-term earnings growth. It only took Southwest about 10 years and H&R Block about 20 years to generate a 100x return. Airlines, taxes, railroads, toys, clothes, industrial equipment... They may be boring. But these businesses were profitable over the long run and rewarded shareholders with what could be life-changing gains. So, where will the next big winners come from? Over the weekend, I was sitting on a train traveling to a wedding. So I had time to think without being chased by my children. That's where I read about Kansas City Southern returning 100x in 18 years. I think train travel (be it passenger or freight) is something a lot of people may take for granted today, especially a trip that's on time and painless. People and freight have always needed to get between points. Still, maybe railroads aren't the best place to look for long-term-growth stocks today... So what could be the big potential areas of growth in the next 10, 20, or 40 years? Where will the next 100-baggers come from? I won't give away all the details from Chris' book... and nobody can tell you for sure. But there are several traits these companies will likely share. And there's something to be said for looking for the best high-quality businesses in industries with long potential runways for growth. You just have to know where to look... Here's an investing exercise anyone can do... Pause for a moment and look around you. Note the first thing you see. What materials is it made of? Where does it likely come from? What energy source is used to power it? Why is it of value to you? How much does it cost to buy or produce? Who manufactures it? How could its use change in the future? And then, note what likely won't change about this product or service in the future. The great financial writer and thinker Morgan Housel – who will speak at our annual Stansberry Conference in October – wrote eloquently about this idea in a 2017 essay titled "[Betting on Things That Never Change](... In the last 100 years we've gone from horses to jets and mailing letters to Skype. But every sustainable business is accompanied by one of a handful of timeless strategies: - Lower prices. - Faster solutions to problems. - Greater control over your time. - More choices. - Added comfort. - Entertainment/curiosity. - Deeper human interactions. - Greater transparency. - Less collateral damage. - Higher social status. - Increased confidence/trust. You can make big, long-term bets on these things, because there's no chance people will stop caring about them in the future. These are ideas that often go overlooked in our world – where it feels like everything is changing – but they're important when thinking about what industries will continue to grow. Will it be trains, planes, tax accountants, etc... or something else? I'm willing to bet that at least a few great companies following one or even several of the above strategies will end up returning 100x investors' money. That's a claim I don't make lightly. Of course, not every company will return 100-to-1, but history shows some will. For example, Southwest Airlines' fortunes boomed when it offered more affordable fares. It grew from a regional to a national airline. In an example from Housel's essay, he noted one of Buffett's most famous investments with Berkshire Hathaway... Buffett has owned GEICO stock since 1951. During that time the company went from exclusively selling auto insurance to government employees in cafeterias, to selling several kinds of insurance to everyone on their iPhones. Analytics went from abacus to [artificial intelligence]. These are not small changes. But one thing stayed the same, which is that an insurance company selling directly would have a cost and convenience advantage over those paying brokers. That's been the driver of Buffett's GEICO bet for 66 years. It's timeless. I'm not saying thinking along these lines is perfect or the only way to find sectors, industries, or trends that will definitely grow in the future... But it's a great way to start. Even if the businesses you find don't grow 100-to-1, they may outperform the broad market. Energy could be a winner... As I ran through the above exercise, I was struck by how many answers involved electricity. The train itself... the 120-volt power outlets next to the seats... and my fellow passengers' phones all need electricity. By extension, that leads to natural gas, which was the largest source – about 40% – of U.S. electricity generation in 2022. So a company that can generate and/or distribute natural gas faster and cheaper could be a long-term winner. Maybe that's why Buffett seems so interested in the energy space today, buying up shares of Occidental Petroleum (OXY) and more. Last week, Berkshire Hathaway bought a 50% stake in a liquefied natural gas facility here in Maryland for $3.3 billion in cash. But you may get other ideas based on your own observations... Another big potential winner... Through the first half of this year, the biggest buzz in stocks has been about artificial intelligence ("AI"). We've received countless questions about the AI craze that has swept the country. Frankly, we were initially skeptical of the hype. It seemed to simply be renewed interest in AI, thanks to a new version of ChatGPT software that showcased the potential for AI programs. Many of our analysts and editors have been on top of the AI story for years. And many companies have been using AI for years. But as I read over the above list of "timeless strategies," I'm coming around to the idea that the AI story may just be starting. The technology has the potential to meet at least half of Housel's criteria, most notably offering "faster solutions to problems." Much like trains and planes once did, AI could transform many industries... It's a possibility worth exploring. That's exactly what Retirement Millionaire editor Dr. David "Doc" Eifrig and Marc Chaikin, founder of our corporate affiliate Chaikin Analytics, are gearing up to do this Wednesday. In an entirely free, new video presentation, Doc and Marc plan to dive deep into the great AI race, debate its merits, cut through the hype, and give you their full and unbiased answers. As Doc recently wrote... There's a critically important reason why we've decided to host this debate now. You see, AI has recently been said to have "broken" one of the most fundamental laws of technological advancement. And today, AI is evolving faster than any other technology in the history of humanity. The potential benefits (and pitfalls) of this innovation are of a magnitude I've rarely witnessed in my lifetime. There might be entire new sectors that AI spawns... and high-quality, profitable companies are likely to incorporate AI into their existing business plans, which could fuel their growth as this technology is introduced and refined. There are also concerns worth being aware of, and plenty to talk about overall. Don't miss Doc and Marc's event. Again, it's 100% free. We just ask that you sign up in advance. [You can register here today](. --------------------------------------------------------------- Recommended Links: # [The 2023 AI Race: Will You Be Left Behind?]( On Wednesday, July 19, two Wall Street legends are joining forces for the first time ever... to reveal how artificial intelligence ("AI") has just shattered one of the most important barriers in technological history. Together, they'll show you all the details behind this momentous breakthrough... and exactly why the opportunity to use AI in 2023 could transform your wealth – or leave you behind forever. This critical update is 100% free – [click here for details](. --------------------------------------------------------------- # ['Federal Bitcoin' Is Coming to a Bank Near You THIS MONTH]( Beginning this month, the U.S. government will take the first step toward creating its own cryptocurrency... a "federal bitcoin." The U.S. Treasury and 120 banks have already signed up for it. If you get positioned before the rollout this month, you could make 3,050%. [Click here to learn more](. --------------------------------------------------------------- New 52-week highs (as of 7/14/23): Aehr Test Systems (AEHR), A.O. Smith (AOS), ASML (ASML), Boyd Gaming (BYD), CBOE Global Markets (CBOE), Copart (CPRT), Commvault Systems (CVLT), D.R. Horton (DHI), Electronic Arts (EA), Gambling.com (GAMB), Intercontinental Exchange (ICE), Iron Mountain (IRM), iShares U.S. Home Construction Fund (ITB), JPMorgan Chase (JPM), Lennar (LEN), MYR Group (MYRG), NVR (NVR), Flutter Entertainment (PDYPY), PulteGroup (PHM), Rollins (ROL), Sherwin-Williams (SHW), S&P Global (SPGI), Spotify Technology (SPOT), Taylor Morrison Home (TMHC), Trane Technologies (TT), The Trade Desk (TTD), Vericel (VCEL), Verisk Analytics (VRSK), and West Pharmaceutical Services (WST). In today's mailbag, feedback on [Dan Ferris' latest Friday essay]( and some thoughts about AI... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com. "I like the comparison of a Minsky Moment to Wile E. Coyote chasing the Road Runner. We all know what happens. Much more illustrative than 'capitalist market mechanisms'. – Subscriber Bob T. "Don't underestimate the resistance to AI as we're seeing with the [Screen Actors Guild] strike. [Stephen] Hawking warned about this technology which will have further implications for the working classes at all levels. The reality of the threat to jobs is not to be taken lightly and these include prominent investors as well. It may be an unstoppable force that will take time to implement." – Subscriber Rodger G. All the best, Corey McLaughlin Baltimore, Maryland July 17, 2023 --------------------------------------------------------------- Stansberry Research Top 10 Open Recommendations Top 10 highest-returning open positions across all Stansberry Research portfolios Stock Buy Date Return Publication Analyst MSFT Microsoft 11/11/10 1,255.9% Retirement Millionaire Doc MSFT Microsoft 02/10/12 1,084.4% Stansberry's Investment Advisory Porter ADP Automatic Data 10/09/08 825.4% Extreme Value Ferris wstETH Wrapped Staked Ethereum 02/21/20 634.1% Stansberry Innovations Report Wade HSY Hershey 12/07/07 577.6% Stansberry's Investment Advisory Porter WRB W.R. Berkley 03/16/12 518.5% Stansberry's Investment Advisory Porter BRK.B Berkshire Hathaway 04/01/09 504.8% Retirement Millionaire Doc AFG American Financial 10/12/12 396.4% Stansberry's Investment Advisory Porter TTD The Trade Desk 10/17/19 350.5% Stansberry Innovations Report Engel FSMEX Fidelity Sel Med 09/03/08 318.9% Retirement Millionaire Doc Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any Stansberry Research publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio. --------------------------------------------------------------- Top 10 Totals 4 Stansberry's Investment Advisory Porter 3 Retirement Millionaire Doc 2 Stansberry Innovations Report Engel/Wade 1 Extreme Value Ferris --------------------------------------------------------------- Top 5 Crypto Capital Open Recommendations Top 5 highest-returning open positions in the Crypto Capital model portfolio Stock Buy Date Return Publication Analyst wstETH Wrapped Staked Ethereum 12/07/18 1,500.1% Crypto Capital Wade ONE-USD Harmony 12/16/19 1,086.3% Crypto Capital Wade POLY/USD Polymath 05/19/20 1,037.3% Crypto Capital Wade MATIC/USD Polygon 02/25/21 839.1% Crypto Capital Wade BTC/USD Bitcoin 11/27/18 707.1% Crypto Capital Wade Please note: Securities appearing in the Top 5 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the Crypto Capital model portfolio. The buy date reflects when the recommendation was made, and the return shows its performance since that date. To learn if it's still a recommended buy today, you must be a subscriber and refer to the most recent portfolio. --------------------------------------------------------------- Stansberry Research Hall of Fame Top 10 all-time, highest-returning closed positions across all Stansberry portfolios Investment Symbol Duration Gain Publication Analyst Nvidia^* NVDA 5.96 years 1,466% Venture Tech. Lashmet Band Protocol crypto 0.32 years 1,169% Crypto Capital Wade Terra crypto 0.41 years 1,164% Crypto Capital Wade Inovio Pharma.^ INO 1.01 years 1,139% Venture Tech. Lashmet Seabridge Gold^ SA 4.20 years 995% Sjug Conf. Sjuggerud Frontier crypto 0.08 years 978% Crypto Capital Wade Binance Coin crypto 1.78 years 963% Crypto Capital Wade Nvidia^* NVDA 4.12 years 777% Venture Tech. Lashmet Intellia Therapeutics NTLA 1.95 years 775% Amer. Moonshots Root Rite Aid 8.5% bond 4.97 years 773% True Income Williams ^ These gains occurred with a partial position in the respective stocks. * The two partial positions in Nvidia were part of a single recommendation. Editor Dave Lashmet closed the first leg of the position in November 2016 for a gain of about 108%. Then, he closed the second leg in July 2020 for a 777% return. And finally, in May 2022, he booked a 1,466% return on the final leg. Subscribers who followed his advice on Nvidia could've recorded a total weighted average gain of more than 600%. You have received this e-mail as part of your subscription to Stansberry Digest. If you no longer want to receive e-mails from Stansberry Digest [click here](. Published by Stansberry Research. You’re receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. 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