It's been the same old song. Another day. Another new high (or close to it) for stocks, leaving the bear market even further behind and just a distant memory.
But investors looking closely see an extremely small group of just five stocks in the current broad Standard & Poor's 1500 index turned anyone that invested $25,000 at the market's low, and held on, into millionaires. That kind of money never gets boring. These stocks are also the most dramatic example of how investors have done from cowering from the bear market to relishing the bull.
Mattress maker Select Comfort, real-estate investment trust General Growth Properties and telecom gear maker CalAmp, rocketed 3,900% or more from the market's bottom on March 9, 2009, according to a USA TODAY analysis of data from S&P Capital IQ. That would make a $25,000 initial investment into one worth $1 million today. That makes the impressive 184% run in the same period seem downright ho-hum.
Yes, hindsight is 20/20 to be sure. These aren't stocks for the weak at heart. Not many investors would have had the courage to drop $25,000 on any of them nor would have have been advised to do so. All but one of the stocks, General Growth, are members of the subset of the S&P 1500 for the smallest stocks. It would have taken not just incredible fortune to find these gems at the market's bottom, but Herculean courage to hold on for more than five years.
Yet, these remarkable runs are a reminder that movements by the broad market obscure intense gains and that beat-up left for dead stocks can often generate incredible gains.
The biggest gainer is Select Comfort, which makes bedding and mattresses of all things. Investors could have bought 100,000 shares on March 9, 2009 at a price of $0.25 each. Those shares are now trading for $18.71 apiece, meaning the 100,000 shares would be worth $1.9 million now. Not too shabby.
The only non-small company stock to be part of the millionaire-making club is General Growth Properties, which is a real-estate investment trust. A $25,000 investment on March 9, 2009 would have bought you 65,789 shares at $0.38 a share on a split-adjusted basis. Today those shares are worth $23.83 making your initial investment worth more than $1.5 million.
It can't be stressed enough how risky these stocks are. Three of these five millionaire-making stocks are down this year. The worst performer of the group is telecom gear maker CalAmp, which is off 35% this year. Another scary point: Several of these stocks were trading for less than a dollar back on March 9, 2009 on a split-adjusted basis. Stocks trading for less than $1 are infamously risky things to play with, a point being proven again this year.
Markets are up, and that's good for everyone who's in the market. And these are certainly the outliers probably few if any investors actually rode up this much. But, still still fun to look back and wonder, "what if?"
Below are the five stocks that would have turned a $25,000 investment into a million from the March 9, 2009 low:
—By Matt Krantz, USA Today