Investing in the Visionaries

NEW YORK ( TheStreet) -- There are a lot of really great companies out there, amazing companies that continually outperform their peers and the broader market. Some are great to own for the yield, some you want for the growth and some are appealing for stability.

Aside from looking for all three of these qualities, there's a different way to outperform the market. It can take you down the wrong road at times but the successful ones will take you far on the upside.

I'm talking about investing in visionaries, not just companies.

A visionary isn't just a great CEO. They don't just have a few good ideas that do well for a couple of years or have a well-managed tenure at the helm. Visionaries change consumers and give the masses what they want before they know they want it. Visionaries change the way we do things on a day-to-day basis.

Visionaries change the world. Jeff Bezos of ( AMZN), Steve Jobs of Apple ( AAPL) and Howard Schultz of Starbucks ( SBUX) are examples. With a visionary's success comes shareholder success.

Let's look at the split-adjusted returns of those three companies:
  • Amazon began trading at $1.51 and recently traded at $266.26, a return of about 17,449%.
  • Apple began trading at $3.55 and recently traded at $445.09, a return of around 12,576%.
  • Starbucks began trading at 78 cents and is now at $62.67, a return of 8,041%.

Bezos' vision was to change the ecommerce landscape. Jobs' vision was to change basically everything we do with technology, such as how we listen to music, call a friend or write an essay. Schultz's vision was to change the way we buy and consume coffee, as well as the culture around doing so.

All of those visions have translated into very big returns for investors who were there from the beginning, heard the crazy madman and his goofy idea.

Now that crazy madman is referred to as brilliant and fascinating. He is looked upon as one of the great innovators of our time. His goofy idea is viewed as genius and is the norm among the masses. His dream that was dubbed "too big," is now enormous, stretching to isolated pockets around the globe.

The most recent visionary experiencing extreme success would be Elon Musk, CEO of Tesla Motors ( TSLA). Maybe Tesla will end up being a huge flop but those who were in the company's stock early have already experienced a quick tripling in 2012 alone.

Is there more room to go? Probably. Will it end up a success? Tough to tell. Maybe introducing a lower-priced electric vehicle that could be mass-produced at a cheaper price would drive Tesla's market share higher. But there is no question early investors were heavily rewarded, and this could just be the beginning.

There have been doubters -- it's pretty easy finding the bearish case on Tesla and the bears have solid points. But sometimes valuation goes out the door and a visionary's dream and early success are enough to drive the stock higher.

Amazon was and is one of those names but some people have been bearish on Amazon for three, four, even five years -- and the stock continues to go higher.

So how do you find the next visionary? Just look at the products because there's a huge difference between a fad and a revolution.

For instance, when Crocs ( CROX) shoes were popping up everywhere, why wasn't that the next big thing? Because the shoes were made out of plastic from China -- not exactly a world-changing product.

Now look at Apple's iPod. Until the iPod, the easiest way to listen to music was on compact disc or using an MP3 player with no real storage capacity, essentially a digitized version of a CD.

That was until Steve Jobs came along. The iPod, with its simple and elegant design, made listening to music a joy. It was easy to store, find and listen to music. As Jobs constantly referenced, it was 1,000 songs in your pocket. Even if you missed the booming success of Apple's iPod for several quarters, you still could have gotten into Apple and made massive gains on the upside.

Another example is the iPad. If you played with one for five minutes you knew no competitor would be able to generate something of equal caliber for quite some time.

There were already versions of a tablet out there but they were essentially e-readers. They were nice and still have their advantages but the iPad is leaps and bounds above what any other product could do. An iPad was a touchscreen, keyboard-less computer that was incredibly simple to use.

You know when it's revolutionary. If you stand there asking yourself, "This thing is a piece of junk. Why would anyone want to own this?" then you're likely staring directly at a fad.

There will always be doubters who look at a product and would rather poke holes in it. Some bears might be right. However, there's a lot of money to be made on the upside of a visionary's dream.

Stability from blue-chips, yield from high dividend stocks and growth from tech names are all nice. But thousands of percent in return from investing early with a visionary and his or her dream is even better.

At the time of publication the author was long AAPL and SBUX.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Bret Kenwell currently writes, blogs and also contributes to Rocco Pendola's Weekly Options Newsletter. Focuses on short- to intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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