I want to tell you about the most consistent performers of the past decade. Not the ones with the very best total returns, but the ones that have put up positive results in each of the past 10 years. A lot of the names will confound you, as they are not the sort of glamorous companies that seek out or get a lot of publicity. They just find a way to make money for shareholders, every single year. According to my calculations, of the 10,000-plus stocks available for purchase today, only 17 have recorded positive total returns in every one of the past 10 years. In my experience, the stocks with streaks tend to have staying power. At the start of 2005, there were just five stocks with a 10-year winning streak, and they were up 16% on average last year: Expeditors International of Washington ( EXPD), up 24%; Genlyte Group ( GLYT), up 26%; Brown & Brown ( BRO), up 40%; Stryker ( SYK), down 8%; and Graco ( GGG), down 0.9%. I'll show you the full list at the start of 2006 in a moment. But first, let's meet a few up close.
Building BlocksFour of the companies on a 10-year winning streak are in the construction-materials business. If you're nervous about housing but want to make sure you don't miss out on gains from what has been a hot sector, these provide a way in with less risk. SCP Pool ( POOL), Genlyte Group, Florida Rock Industries ( FRK) and Simpson Manufacturing ( SSD) have returned 57%, 35%, 35% and 27%, respectively, on average, over the past 10 years. All have naturally put up great numbers in years when the major homebuilders have done well, as in 2003 and 2004. But they have also cruised even when the homebuilders have faltered, as in 1996, 1999 and 2002. Florida Rock is just what it sounds like: It quarries sand and gravel, which are surprisingly not plentiful even in Florida, and processes cement and concrete, which are in short supply worldwide. It's been growing earnings 20% annually for the past two decades, has 30 years of rock reserves and a bulletproof balance sheet containing $70 million cash, services the fastest-growing state in the nation, pays a 1.7% dividend and is run by its founding family. The shares have recently slumped 20% off their high and look good for newcomers.
A Small StumbleOf course, stocks that make a clean sweep of the prior 10 years can stumble in the 11th. But it is fairly rare. One company that was up every year from 1994 to 2004 fell in 2005. But it was down by less by 1%, so I'm including it on the list anyway. That was Graco, a Minneapolis-based maker of fluid-control devices for heavy industry. Its products spray paint on cars, apply lubricants and sealants and leave equipment and buildings with high-pressure washes. The company has grown 15% to 20% for years, with its price/earnings multiple in the 11-to-18 range. Gross margins are in the 50%-to-55% range, which is fantastic for an industrial manufacturer. That's mostly due to its ability to control costs and maintain pricing power by innovating new products; nearly a third of its sales come from products introduced in the past three years. There's no debt, and the company regularly buys back stock and boosts its dividend. Three acquisitions slowed the company's results in 2005, but with a new round of products due and the purchases reportedly on track, Graco should make up for lost ground this year. UBS analyst Andrew W. Cash says the market is not giving the company enough credit for its tremendous cash-flow generation, which he thinks will accelerate in 2006 as the cost of improving the efficiency of a newly acquired spray-on foam insulation business pays off. Cash figures the stocks should head toward $60 over the next 18 months, or about 65% higher than the current quote. Here's the full list.
| Most Consistent Performers of the Last 10 Years |
|Company Name||1/6/06 Price||10-year average gain||Market cap|
|Chico's FAS (CHS)||$42.26||89.6%||$8.1 billion|
|SCP Pool (POOL)||36.61||56.6||1.9 billion|
|Expeditors International of Washington (EXPD)||67.67||46.4||7.3 billion|
|Center Financial (CLFC)||25.80||42.8||422 million|
|Brown & Brown (BRO)||30.63||39.8||4.2 billion|
|Florida Rock Industries (FRK)||52.85||35.3||3.2 billion|
|Genlyte Group (GLYT)||56.49||34.9||1.5 billion|
|Cathay General Bancorp (CATY)||37.48||33.4||1.8 billion|
|Graco (GGG)||38.97||32.8||2.5 billion|
|Southwest Water (SWWC)||14.79||28.1||310 million|
|Simpson Manufacturing (SSD)||38.61||27.5||1.8 billion|
|Harbor Florida Bancshares (HARB)||36.86||27.4||884 million|
|Franklin Electric (FELE)||41.39||22.3||901 million|
|Australia and New Zealand Banking (ANZ)||92.21||21.0||31.9 billion|
|Home Properties (HME)||42.97||18.2||1.3 billion|
|National Australia Bank (NAB)||123.16||15.9||37 billion|
|New Jersey Resources (NJR)||43.50||13.1||1.1 billion|
|Source: MSN Money|