The Value of Following Winning Stocks

I was speaking recently with a neighbor about veterinary bills and it reminded me of one of my favorite companies, VCA Antech Incorporated (NASDAQ/WOOF). I’ve liked this company since 2004. The stock hasn’t been a major high-flyer, but it did double in three years.

Growth is slowing at this company, but if you own its shares, you’ll likely do well if you keep holding them for the next several
years. The veterinary business is almost recession-proof. Another larger-cap company that I’m very fond of is Luxottica
Group (NYSE/LUX). Longtime readers of this column know of my affinity for the eye care business as an investment theme. Pull up a three-year chart on this eyeglasses manufacturer, and you’ll see how outstanding a wealth creator it’s been. The good news is that this company is going to keep creating wealth for stockholders over the next several years.

One company I haven’t written about in a long time is Fuel-Tech Incorporated (NASDAQ/FTEK). When I first got interested in this innovative micro-cap company, it was trading around $6.50 per share. Now the stock is trading around $28.00 per share and it is overpriced on the market.

Fuel-Tech is one interesting company. Its nitrogen oxide–reduction technology is designed to reduce pollutants from the smokestacks. The company has had particular success in China, where there is a serious pollution problem. Even though this company is still not all that big, its success on the stock market was due to its operational growth and the market’s interest and willingness to speculate on alternative energy and pollution-reduction stocks. In this particular case, timing was everything.

It’s always useful to review past winners on the stock market. In fact, I believe it to be invaluable, even if it isn’t a stock you
invested in. The process of doing so helps you to develop a sense for the key attributes that make a successful stock. The more time and effort you put toward reviewing already successful stocks, the more easily recognizable the next major winners will be. Trust me, it works.