It has been close to six years since the S&P peaked on Oct. 11, 2007, marking the start of the Great Recession. Today, the index stands at less than 6% above that level. The uninspiring returns have led some to suggest that a long-term buy-and-hold strategy would be a prescription for disaster — especially, in times like these. However, at least three multibaggers emphatically put that suggestion to rest.
But it may be too broad to completely dismiss a buy-and-hold strategy. And from these three multibaggers, there are lessons that could be learnt.
Looking back, looking ahead
The three companies below have achieved multibagger returns from Oct. 12, 2007 through June 28, 2013.
| Stock | EPS Returns | EPS Annualized Return | Total Returns | Annualized Return |
| Chipotle Mexican Grill (NYSE:CMG) | 552.6% | 33.8% | 197.0% | 20.4% |
| Priceline.com (NASDAQ:PCLN) | 1668.8% | 61.6% | 785.3% | 45.0% |
| Panera Bread (NASDAQ:PNRA) | 342.5% | 23.4% | 289.3% | 26.1% |
Judging from their business performance, these stocks’ returns do not appear to be a stroke of luck.
Take Chipotle Mexican Grill, Inc. (NYSE:CMG), for instance. Chipotle Mexican Grill, Inc. (NYSE:CMG)’s passion for organic, and sustainably-raised food caught flavor as it grew from 640 stores to 1,410 stores in less than six years. This tasty store growth has led to earnings multiplying by more than five times, and the stock price delivering close to a three-bagger.
Looking ahead, Chipotle Mexican Grill, Inc. (NYSE:CMG) is extending its mission for sustainable organic food through a new Southeast Asian ShopHouse concept. With a new concept for growth and a store count less than a third of Taco Bell, Chipotle Mexican Grill, Inc. (NYSE:CMG) may well have a decade’s worth of growth ahead of it.
Priceline.com Inc (NASDAQ:PCLN) — the online travel company — did even better. During this period, Priceline.com Inc (NASDAQ:PCLN) grew Booking.com’s network of hotels from 53,000 hotels in 53 countries to 295,000 hotels in 180 countries. The huge network of hotels, coupled with a superior traffic-to-booking conversion rate, has led shareholders of Priceline.com Inc (NASDAQ:PCLN) to a stunning 1,668% increase in earnings, and a one-way-ticket to almost an eight-bagger.
With the growing network effect of its hotels, its history of smart acquisitions and online booking penetration still relatively low in emerging countries, Priceline.com Inc (NASDAQ:PCLN) may yet have a decent growth runway ahead of it.
Bakery-cafe restaurateur, Panera Bread Co (NASDAQ:PNRA) is also no deflated dough, either. Panera Bread Co (NASDAQ:PNRA)’s focus on fresh bakeries with a concentrated franchisee model has supported consistent, high-quality growth while it expanded from 1,168 to 1,673 stores. Its catering services and MyPanera card have also helped increase weekly average store sales by 23% over the time period. This performance led Panera Bread Co (NASDAQ:PNRA) shares to almost a four-bagger.
Looking ahead, if Panera Bread Co (NASDAQ:PNRA) is able to achieve even a fraction of rival Subway’s 39,314 stores worldwide, shareholders could well look forward to decades of growth.
Thank you, Captain Hindsight
To be sure, this is not to show the reader the power of 20/20 hindsight. Observant readers would have noted that the stock prices for the three companies chosen were not the best possible stock prices obtainable throughout the period. It becomes obvious that the performance of the business behind the ticker managed to outlast the imperfect initial stock price, as well as the imperfect high market level.
In other words, successful investing has hardly ever been about catching the perfect bottom price, or selling at the perfect top stock price, in equally perfect market conditions.
Instead, the key lesson that we can take from investing in potential market highs is to keep our focus on the underlying growth of great business at all times, in spite of the market conditions.
If you try to own great businesses, and continue to study those businesses over the long term, you could profit handsomely over the long term — even if you start during a market high.
The article 3 Multibaggers From 2007’s Market High originally appeared on Fool.com.
HL Chin owns shares of Chipotle Mexican Grill, Priceline.com, and Panera Bread. The Motley Fool recommends Chipotle Mexican Grill, Panera Bread, and Priceline.com. The Motley Fool owns shares of Chipotle Mexican Grill, Panera Bread, and Priceline.com. HL is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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