Recent Market Leader Performance

So let's look back at a handful of the stocks currently leading the market since the current bull market began in 2009. For illustrative purposes, we've chosen to look at eight stocks.

From the list below, we've noted the stock's IPO date, and the periods in which the stocks had their most incredible price performance. You'll notice that just as William O'Neil discovered, all eight of these stocks had their most dramatic runs during a period of no more than three years. The time it took between the IPO and the big run launch was sometimes as little as three months (in case of Solarcity), while some took as long as 20 years (Keurig Green Mountain). One never knows when these big runs will begin, but when they do, they have a life-changing effect on your portfolio.

3D Systems (DDD): IPO date June 20, 1995. Duration: 3Q 2010 to 1Q 2014. 2,259% gain.
Stratasys (SSYS): IPO date Dec 30, 1994. Duration: 4Q 2011 to 1Q 2014. 672% gain.
SolarCity (SCTY): IPO date Dec 12, 2012. Duration: 4Q 2012 to 1Q 2014. 1,004% gain.
Tesla Motors (TSLA): IPO date June 28, 2010. Duration: 1Q 2013 to 3Q 2014. 791% gain.
Keurig Green Mountain (GMCR): IPO date Sep 21, 1993. Duration: 3Q 2012 to 4Q 2014. 828% gain.
LinkedIn (LNKD): IPO date May 18, 2011. Duration: 4Q 2011 to Present. 393% gain to date.
Facebook (FB): IPO date May 17, 2012. Duration: 3Q 2012 to Present. 387% gain to date.
Netflix (NFLX): IPO date May 22, 2002. Duration: 4Q 2012 to Present. 955% gain to date.

What caused these huge runs? It is hard to generalize, but what is indisputable is that something changed at each company. Some big market opened up, providing the catalyst for spectacular growth that caught the attention of the Street's biggest fund managers. It's all about supply and demand. The supply of shares of spectacular growth companies in the stock markets is surprisingly scarce, so these names will always attract the attention (and bidding) of portfolio managers the world over. As a result, company valuations of these fastest growers will expand far beyond most initial analysis.

You'll notice that these names are no longer on the IBD Sector Leader list (with exception of LinkedIn). IBD's Sector Leaders are still in the midst of their big runs. Many of the names we listed above were once on the Sector Leader list but have concluded their big runs (with exception of LinkedIn, Facebook and Netflix), and are now in price corrections. The portfolio managers who caught a portion of these big runs are now in profit-taking mode, and the pullbacks can be quite severe. In the case of DDD and SSYS, the price corrections are especially severe.

But how do you discover these names BEFORE their big runs, not afterwards? The trick for investors is in finding a good screening approach to find and follow these fast growers. We here at Growth Stock Leaders are here to help in that search. In our next post, we will discuss some of our screening tools.