small caps

Here is an article that looks at the past 8 years in a different light: It wasn't tech that was making the largest returns, but these finely selected small ( under 200M) companies. Their stocks grew 8,000% in the years 1996-2006. Mid-caps grew around 1,200%. I'm not surprised that they were obscure or around since 1930 and then shot up. They also did not grow into mega companies to achieve that return - showing that growth is not necessarily profit. (go teredyn, 7.05 profit margin on 1.1 B)
I remember reading an article on a invest circle who would only invest locally - they researched and even visited these companies and came out with an average annual gain of 25%. This is an investment strategy that attracts me.

investerpedia: One of the biggest advantages of investing in small-cap stocks is the opportunity to beat institutional investors. Because mutual funds have restrictions that limit them from buying large portions of any one issuer's outstanding shares, some mutual funds would not be able to give the small cap a meaningful position in the fund.

interesting! so these gems can stay under the radar longer!

The Market's 10 Best Stocks/ Motley Fool
By Tim Hanson (TMF Mmbop) March 2, 2006
10 top performers:

Company	Current Market Cap*	Return 1996-2005
Hansen Natural	$2,070	24,185%
Chico's	$8,480	17,600%
NVR	$4,660	7,150%
Christopher & Banks	$797	6,795%
Meritage Homes (NYSE: MTH)	$1,620	5,860%
American Eagle Outfitters	$3,830	4,850%
Comtech Telecommunications	$713	4,315%
SCP Pool (Nasdaq: POOL)	$2,270	4,090%
Engineered Support Systems**	N/A	3,800%
Jos. A. Bank	$771	3,790%
	Total Average Return	8,240%

*In millions.

There are more than a few things shocking about this list. First, these companies are obscure. Hansen Natural -- the greatest stock of the past decade -- has sold all-natural juices and sodas since the 1930s. Chico's sells clothes to women in their 30s, and 10 years ago it had fewer than 250 stores. SCP Pool -- a company with 45% annual returns -- wholesales swimming pool supplies and chemicals!

Second, there's only one "tech" firm on the list -- and it's not one of the famous ones. Only four analysts are currently following Comtech.

The greatest stocks of the past decade were:

1. Obscure.
2. Ignored.
3. Small.

Ten years ago, none of these companies had a heavy following from the pros on Wall Street. Even more incredibly, some still don't.

Finally, none of these companies was worth more than $200 million 10 years ago. After 10 years of incredible growth, seven of them are still small caps! Only Chico's, NVR, and American Eagle have moved comfortably into mid-cap status.