Stocks Worth Waiting For

Instant gratification is becoming more and more a part of our
culture. Technology has allowed us to obtain information and services
whenever we want them. Not sure what the word "indefatigable" means? Google
can give you the answer in 0.02 seconds. Heck, you can download an
entire music library from the comfort of your own home and play it a
few minutes later on your iPod while you're making a quesadilla.

With stocks, however, not much has changed over the years. Large
fortunes are still built over years and decades, not minutes and hours.

When we take the time to research a company and make an investment,
it would be nice to receive instant confirmation that we made the right
decision. Unfortunately, it might take quite a while to receive that
confirmation.

Consider:

Data from Capital IQ, a division of Standard & Poor's.

Patient investors got the last laugh. Despite the recent market
volatility, each of these stocks crushed the 10-year returns of both
the S&P and the Nasdaq -- a decade in which then-blue chips like Citigroup (NYSE: C) and Eastman Kodak (NYSE: EK) posted substantial losses.

The mustard seed
It can be
particularly trying to wait for smaller companies, especially in a
topsy-turvy market like this past year, but the fact remains that while
the larger companies have legions of analysts following their every
move, small companies attract little or no Wall Street coverage. This
means that even if the company is growing, the market might be slow to
catch on.

For instance, in May 2003, the best stock of the past 10 years, Hansen Natural,
traded at approximately the same price it did in June 1998. During this
period, the company ran a good business -- it increased net income by
67% and revenue by 97%, and it posted a double-digit return on equity
while ramping up its profitable energy-drink lineup.

But the best was yet to come. When Wall Street eventually realized
Hansen Natural's growth potential and its strong brand, the stock
soared. Today, it's up about 6,400% in just six and a half years --
turning $10,000 into $650,000 today. Patient investors who saw the
potential in Hansen Natural's growth strategy have been rewarded, to
say the least.

How do I get those returns?!
OK,
Hansen Natural might be an extreme example. After all, not many stocks
jump 6,400% in six years -- so I'll give you another example.

In July 2004, Fool co-founder Tom Gardner recommended Buffalo Wild Wings to Motley Fool Hidden Gems
subscribers. He saw a rapidly growing $200 million restaurant chain
with the potential to become a category-killer in casual dining.
Moreover, the company had $47 million in cash, zero debt, and high
insider ownership.

Everything pointed to higher returns, but 10 months later, the pick
had risen by only 9%. Despite the weak returns, Tom still felt strongly
about Buffalo Wild Wings' potential and recommended the stock two more
times to Hidden Gems subscribers during this period.

Sticking to his guns paid off: Buffalo Wild Wings has largely bucked
this recession, and the original recommendation has since returned 220%.

The Foolish bottom line
The market will eventually recognize exceptional companies -- and when it does, the returns can be huge. Sometimes, all it takes is a little patience.

Want to find some great stocks with tremendous upside potential? The Hidden Gems
team specializes in finding unrecognized small companies with solid
balance sheets, dominant positioning in their markets, and
shareholder-friendly management teams.

Interested? Follow this link for your free trial.

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