Here's How You Turn $5 Into $1 Million

Before you go, we thought you'd like these...
Before you go close icon

For those of you keeping track at home, turning $5 into $1 million would require finding a 200,000-bagger.

Preposterous. Impossible. Flat-out stupid.

These are the types of comments you should expect to hear about shooting for such results.

Make no mistake, this kind of success isn't easy to come by -- but it's also not impossible.

To create returns like this, you need to know where to look. Today, I'm going to share with you one secret that can supercharge your portfolio: Invest in companies that are truth-killers. These organizations slaughter the so-called "truths" in our society, exposing them for the myths they are.

A short history of truth-killers
We've all heard the story of Christopher Columbus. According to legend, he revealed that a huge "truth" -- that the world is flat -- was actually a myth. If we go back further, we see that before Copernicus, it was accepted as truth that the Earth was the center of the universe.

Killing these truths and exposing them as myths used to be a difficult process. But these days, it seems to happen on a regular basis. My grandma believed that she'd never see me again once I moved to Costa Rica, but through the power of Skype, we were talking face-to-face one week later.

In the investing world, spotting companies that are killing widely accepted truths is the key to getting market-clobbering returns.

Take a look at the chart below, which highlights a few recent truth-killers, and reveals the returns they've provided to investors (assuming all dividends were reinvested).

Company

Truth Killed

$5 invested at IPO (year of IPO)

CAGR

Coca-Cola (NYS: KO)

One brand can't become globally ubiquitous.

$1,129,590 (1919)

14.3%

McDonald's (NYS: MCD)

If you want to eat out, it needs to be at a sit-down restaurant.

$15,778 (1965)

19.1%

Wal-Mart (NYS: WMT)

Only big cities can fulfill all your shopping needs.

$11,813 (1971)

21.4%

Apple (NAS: AAPL)

Your phone, CDs, DVDs, computer, and personal notebook are all separate items.

$736 (1980)

17.5%

Sources: Coca-Cola, McDonald's, and Wal-Mart investor relations, and Yahoo! Finance. CAGR = compounded annual growth rate.

All four of these companies turned conventional wisdom on its head. If you were prescient enough (and in the case of Coke, old enough) to get in on the ground level and patient enough to hold through some tough times over the years, you'd be sitting on a huge pile of cash right now.

What's the next truth on the chopping block?
There are lots of ideas floating around about what the next big thing will be. Many companies will come up short, but a precious few will succeed. If you invest in just one truth-killing company in your entire life, that alone can lead to untold riches.

Below, I've singled out three companies that I believe have the potential to produce such results.

Company

Truth Being Killed

Westport Innovations (NAS: WPRT) Everyday automobiles don't run on natural gas.
SodaStream (NAS: SODA) Soda is something we buy, not something we make.
3-D Systems (NYS: DDD) We actually need to buy things, period, instead of making them.


Westport Innovations is a Canadian-based company that focuses on the development of automobile engines that can run on natural gas only. Though the idea might not have much traction right now among large carmakers, Westport already has a major partnership formed with trucker Cummins. If this partnership turns out to be prosperous, and the economic/political winds continue to push natural gas forward, you can expect big things from this now-small company.

SodaStream has taken a product wildly popular in Europe and attempted to see if it can be successful in the United States. Following in the successful footsteps of Green Mountain Coffee Roasters, whose K-Cup coffeemakers can be found in kitchens and workplaces across the country, SodaStream hopes to popularize the convenience and health benefits of their soda makers.

And if you really want to have some fun imagining what the future will be like, start with 3-D printing, which is what 3-D Systems is all about. It took me a second to really wrap my head around this, but the company's product allows engineers -- and just about anyone else -- to create three-dimensional products on demand, with the blueprint provided by 3-D's proprietary software. Founding Fool David Gardner even believes we could one day be 3-D "printing" our own food on demand.

But this could be the one truth-killer to rule them all!
Truth-killers are the type of companies that David Gardner and his Rule Breakers team are always on the lookout for. They actually believe they have the inside track on the next great truth killer: a company that will make the use of credit cards -- and possibly even cash -- absolutely useless.

He has detailed a company already using this technology, and poised to profit from it, in our newest special free report: "Your Credit Card May Soon Be Worthless. Here's Why... " Inside, you'll get access to a video detailing all you need to know about this growing trend. The report is available for a limited time, and it's yours, absolutely free, right now!

At the time this article was published Fool contributor Brian Stoffel believes in the power of truth-killers. He owns shares of Coca-Cola, Apple, Westport Innovations, SodaStream, and Green Mountain Coffee Roasters. You can follow him on Twitter at @TMFStoffel.The Motley Fool owns shares of Coca-Cola, Wal-Mart, Apple, and 3-D Systems. Motley Fool newsletter services have recommended buying shares of Coca-Cola, Apple, Green Mountain Coffee Roasters, Westport Innovations, SodaStream, McDonald's, Cummins, and Wal-Mart, as well as creating a lurking gator position in Green Mountain Coffee Roasters, a bull call spread position in Apple, and a diagonal call position in Wal-Mart. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners