Learn From These 6 Top Performing Stocks
Cramer has always been a believer in the power of stock picking, but after the last six years of hosting Mad Money — especially with the crash in 2008 and the massive rally over the last two years — knowing how to pick winners is more important than ever.
"How do you find stocks that have the potential to trounce the averages, year after year?" Cramer asked. "You have to find the big money makers of the future, we have to look at the great success stories of the past and analyze them, learn from them, so we can duplicate that success going forward."
With that in mind, Cramer looked at the six best performers of the last six years.
First, there's VirnetxVHC. This was a penny stock when Mad Money started, trading at just 21 cents a share. It's up above $12 today, for a profit of 5,780 percent.
"Honestly, I had never heard of Virnetx until I looked it up this weekend," Cramer said. "This company has a patent on 4G security, and that's about it, but Microsoft paid them $200 million in a patent infringement lawsuit that VHC won last year. Not a lot of revenues, no real growth rate until they won the lawsuit, so this one, for get it, I don't think I could've spotted it."
That can't be said for Green Mountain Coffee Roasters, though. The maker of the Keurig single-cup coffee brewer and the second best performer since Mad Money first aired, has risen from a split-adjusted $1.83 to more than $59 for a 3,125 percent gain.
"This is just one of those built-a-better mousetrap plays," Cramer said.
The other stocks that have seen the biggest jump over the last six years include:
This tiny drug company makes an extremely expensive medication that helps combat multiple sclerosis flares. Questcor has gone from 5 cents a share to $13.16 since 2005, a 2,536 percent gain.
"If you want to speculate in biotech, even in a penny biotech stock, follow the example of Questcor and look for companies with these orphan drugs for niche markets that command tremendous pricing power because the people taking them have no other option," Cramer said.
"You know the story here: people always want a better way to watch a movie, that’s what allowed Netflix to power from $9.50 to $201.20, a 2,018 percent gain," Cramer said. What makes Netflix so special? Value, service, ease of use, and the company’s seamless transition to streaming video, Cramer said.
"I think that if Netflix hadn’t done that, if they’d just kept using DVDs, then it would one day find itself Blockbustered," Cramer said. "Instead they harnessed the Web to build a better video watching mousetrap."
Netflix grew earnings at a 36 percent compound annual growth rate from 2005 through 2010, "so remember," Cramer said, "the market rewards companies that can deliver consistent and enormous growth."
One of the few surviving dot coms, this company never lost favor with those who wanted to get better deals, Cramer said.
"An easy site, lots of publicity, Priceline turned the $700 billion travel industry upside down, and it’s stock soared from $22 to $463.61, a 2,002 percent profit," Cramer said. "Another game changer you could have spotted as it grew earnings at a 20 percent compound annual clip from 2005 to 2010."
SXC Health Solutions
This pharmacy benefit management company was another penny stock that went from $2.52, or a non-split adjusted $1.26, to $50.23 for an 1,893 percent return, while it grew earnings at a 33 percent clip.
SXC holds health care costs down and saves clients money, like Medco or Express Scripts, Cramer said. "SXC benefits from the out-of-control healthcare costs — a story that regularly makes the front page of the newspaper," he said.
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