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We've got an oil shortage. A corn shortage. An honest-politician shortage.
Now you can add a shortage of small-cap growth stocks with potential strangleholds on fast-growing niches. Yep, this year I've had a hard struggle to find enough stocks like that to fill out my annual revision to my Future Fantastic 50.
That's disappointing because for the fourth year in row, that portfolio beat both the Nasdaq Composite Index ($COMPX, news, msgs) and the S&P 500 Index ($INX, news, msgs).
| Year* | Future Fantastic 50 | Nasdaq | S&P 500 |
|---|---|---|---|
2004 | 13% | 10% | 11% |
2005 | 22% | 12% | 11% |
2006 | 6% | -3% | 3% |
2007 | 31% | 25% | 26% |
Since inception, 1999 | 12% | 3% | 17% |
*July to July |
This portfolio clearly is volatile, and these stocks are best-suited for aggressive investors. Even then, they should be owned as the edge surrounding a more conservative growth core.
By casting my net even farther overseas this year, I've been able to keep to my goal of replacing 20% of the stocks in this portfolio in my annual revision.
The 10 stocks I'm adding to the Future 50 portfolio this year are Alvarion (ALVR, news, msgs), Itron (ITRI, news, msgs), DaVita (DVA, news, msgs), Devon Energy (DVN, news, msgs), Embraer-Empresa Brasileir de Aero (ERJ, news, msgs), First Solar (FSLR, news, msgs), Gamesa Tecnologica (GCTAF, news, msgs), Oshkosh Truck (OSK, news, msgs), Plum Creek Timber (PCL, news, msgs) and Suntech Power Holdings (STP, news, msgs).
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I'm also deleting 10 stocks from the portfolio. Two of those, VNU and Color Kinetics (CLRK, news, msgs), are dropping off because they've been or are being acquired. Of the other eight I'm deleting, these four will be added to my 50 Best Stocks in the World portfolio when I revise that list in September: Accor (ACRFF, news, msgs), EMC Corp. (EMC, news, msgs), Nvidia (NVDA, news, msgs) and VeriSign (VRSN, news, msgs). I'm dropping a final four from the Future 50 list because, in my estimation, they haven't lived up to their promise and no longer have the future potential I require from stocks on this list. They are BEA Systems (BEAS, news, msgs), Evergeen Solar (ESLR, news, msgs), JDS Uniphase (JDSU, news, msgs) and Openwave Systems (OPWV, news, msgs).
Remember, a stock has to jump a pretty high hurdle to make it onto this list. I began the Future 50 list in July 1999 with the goal of identifying 50 stocks that passed a simple test: If you were to look at the list five years down the road, you'd say about each entry, "Boy, I wish I'd bought that five years ago."
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Jubak's Journal: The up-and-comersThere's a shortage of great young growth companies right now, says MSN Money's Jim Jubak. But things are changing. The second quarter of 2007 was the best for new startups since 2001, and the hottest sectors are medical devices, information technology and communications.
If I did a perfect job of picking stocks, each member of the portfolio would have a history of beating the market averages in the past five years and the potential to do it again for the next five. To beat the market, I'm willing to take on a fair measure of short-term volatility. These stocks will give an investor a faster ride up and down than the stocks in my passively managed portfolio, the 50 Best Stocks in the World.
Frankly, there aren't a whole lot of candidates to pick from. I think we're at a cyclical low in the creation of new public growth companies.
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