Do you like to see movies? Do kids like movies? Sure. A few years ago, I did a study of themes in the market that occurred in nearly every cycle. One of the five recurring themes was the leisure and entertainment industry.
For example, in the late 1950s, Diners Club created America's first credit card, Brunswick's new automatic pinspotter set off a bowling boom, and Polaroid's new "picture-in-a-minute" cameras gave people instant photos.
Then in the '60s came all the color-TV stocks, Disney, motorhomes from Winnebago Industries, and McDonald's fast food in the '70s. This Can't Be Yogurt and International Game Technology's computerized casino gaming were new innovations of the '80s and '90s for consumers. More recently we've seen iPods, iTunes, iPhones and iPads from Apple, Priceline's "name your own price" for vacation travels, and Hansen Natural (now Monster Beverage).
These new, innovative leisure companies all had stocks available that soared from 300% to as high, in some cases, as a mind-boggling 10,000%. People old enough to have lived during some of these periods will remember many of these companies and will have used many of their products ... and yet they never stopped to think and buy these stocks that increased in price by three, 10, 50 or 100 times.
And this was just one industry sector in America! There are dozens of other sectors. They too had exciting new leaders pop up in new market cycles. Every week, I'll cover in detail how you can learn to recognize the many future outstanding big leaders that in the past may have been right under your nose, but you never capitalized on them.
We'll use fundamental rules, charts and historical precedents to guide you to, perhaps in time, financial independence if you work at it and not let yourself become discouraged. The more you learn the facts of past innovative leaders the more you'll be able to recognize the next crop of winners.
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Netflix Stock Statistics
They will be there, so never give up if you want to succeed. Here are the vital fundamentals at the time of the first Netflix purchase:
- Last four years of earnings per share: $0.33, $0.82, $1.01, $1.44.
- 2008 cash flow per share: $5.67.
- Return on equity: 23%.
- Pretax margin: 10.5%.
- Last three quarters of EPS growth: +36%, +38%, +58%.
- Last three quarters of sales growth: +11%, +16%, +19%.
- Three straight quarters with higher number of fund owners.
- Seven announced buybacks of stock in last seven quarters.
- Relative Price Strength at new high eight weeks prior to breakout.
This column originally ran in Investor's Business Daily as part of a 2012-14 series on America's greatest stock opportunities written by IBD's founder, the late William J. O'Neil. See more stories in this series.
