The last time Domino’s Pizza (ticker: DPZ) was cool — assuming it ever was — girls wore leg warmers and guys sported mullet haircuts. About as Italian as sauerkraut and the butt of countless delivery boy jokes, Domino’s couldn’t possibly hold a crust, let alone a candle, to cool investments like Facebook ( FB) or Apple ( AAPL). So go ahead, laugh — or if you’re a Domino’s investor, laugh all the way to the bank.
Because while most investors drooled in anticipation of the next high-tech investment feast, Domino’s served up a tasty dish to top them all: a 6,000 percent return since late 2008. So if you skipped the large cheese pizza and plunked down your $10 on the stock instead, you’d have pocketed a cool $60,000, give or take a few toppings.
The lesson? Never judge a stock by its sexiness. Here are seven more examples of uncool companies that have nonetheless turned their investors into rock stars.
[See: 9 Psychological Biases That Hurt Investors.]
Philip Morris International (PM). As more cities abolish smoking in bars and restaurants, Philip Morris might seem as appealing as kissing an ashtray. Yet at $114 per share, PM stock has more than tripled since this time in 2009.
“They have a new product I think will be a big hit: Heat-not-Burn technology, which is featured in their new IQOS smokeless cigarette,” says Gerald Sparrow, a portfolio manager on Covestor and president of Sparrow Capital in St. Louis.
The product uses real tobacco to yield all the vapor but none of the nicotine.
Balchem Corp. (BCPC). It’s fitting the name looks like “belch ’em,” given that this company makes fumigating gases, along with nutritional additives for animal feeds.
“If that isn’t unsexy, I don’t know what is,” says Robert Johnson, president and CEO of the American College of Financial Services in Bryn Mawr, Pennsylvania. “But it has a very sexy 15-year return of 22.03 percent annually, compared to 7.09 percent for the S&P 500.”
A relatively small firm with a $2.6 billion market cap, “Balchem seems fairly richly valued, with a forward price-to-earnings ratio of 28.3,” Johnson says.
Waste Management (WM). “Everyone hates the smell of garbage, maybe one of the most unattractive things in the world,” says Yale Bock, a Covestor portfolio manager and president of Y H& C Investments in Las Vegas.
That is, unless the garbage brings with it the sweet smell of success.
As the nation’s largest for-profit trash collector, “Waste Management returned 189 percent over a 12.5 year period,” Bock says. “So you see, unattractive, maybe even disgusting or hateful businesses can often produce beautiful returns, if one looks hard enough and finds the right companies.”
Dover Corp. (DOV). Chicago-based Dover is so nondescript, most Chicagoans don’t even know it even exists.
[See: 10 Ways to Invest in Driverless Cars.]
Dover concentrates on fluid management, industrial products and manufacturing support systems. Yawn. But while high-tech powerhouses LinkedIn Corp. and Twitter ( TWTR) stumbled through 2016, Dover investors reveled in a yearly dividend winning streak going on 60 out of 61 years.
In 2016, DOV’s dividend stood at 42 cents per share, more than twice the 16 cents per share offered 10 years previous. In September 2015, ETF Daily News named Dover its No. 1 dividend achiever.
Avis Budget Group (CAR). For a company dealing in the unloved, oft-abused commodity of rental cars, Avis Budget is built for speed.
“If you purchased the stock for a low of 40 cents a share on Feb. 1, 2009, and sold it today for about $27.50, you would’ve realized a 6,885 percent return — not counting dividends,” says Keith Baker, a faculty member and program director for mortgage banking at North Lake College in Irving, Texas.
And if you could roll back the odometer to December 2014, the return would’ve topped 16,500 percent.
Procter and Gamble Co. (PG). K.C. Ma, director of the George Investments Institute at Stetson University in DeLand, Florida, relates that Warren Buffett had an epiphany after using his Gillette razor.
“He realized men tend to stick to the same product they like, even it’s an unexciting shaver,” Ma says. Women shave their legs, too, Buffett thought — and he soon lathered up on Procter & Gamble stock.
“Since 1970, it has generated a 1,165 percent return, double the S&P’s 531 percent,” he says.
Of course, Ma adds, P&G isn’t all about razors: “Procter and Gamble also makes other unexciting household products.”
II-VI (IIVI). This company’s headquarters in Saxenburg, Pennsylvania, population 1,513, “might fairly be described as being in the Silicon Void,” says Barry Randall, a technology portfolio manager on Covestor with offices in Boston and London.
Yet its spectacular run in fiber optics and lasers has yielded high returns despite the low profile.
[See: 10 Financial Perks of Getting Older.]
Founded in 1971, “II-VI went public in 1987 at a price of 44 cents per share when adjusted for the four 2-for-1 splits that have subsequently occurred,” Randall says. “In early April 2017, shares of IIVI were trading around $34.”
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8 Unsexy Stocks With Super-Sexy Returns originally appeared on usnews.com
