What Drives Growth
By Wilfried Eckl-Dorna Reporter Associate Jenny Mero

(FORTUNE Magazine) – FORTUNE introduced our list of the country's 100 Fastest-Growing Companies in 1991, highlighting corporations that were profiting in a stagnant economy. In its first 13 years, through boom and bust, one lesson has become clear: Fast growth does not follow a formula. Hot sectors emerge and cool off. Technology evolves. Tastes change. Since the first year, we've identified our up-and-comers by tracking revenue growth (we later began factoring in profit growth and stock performance as well). These numbers are a guide. They help us find the businesses in a sweet spot, the managers with the big ideas who get the little things right. The numbers are only part of the story, however. Most of our companies can't sustain the rapid pace. Growth can be fleeting. But when the right factors come together--a great product, relentless execution, creative management--the best ones find a way to use change to their benefit. --Wilfried Eckl-Dorna

The Trends During the first 13 years we compiled FORTUNE's 100 Fastest-Growing Companies list, market patterns emerged from the flux of an ever-changing economy.

1991--94 Health Care Takes Off

In 1991, our initial list of 100 fast-growers featured an up-and-coming tech hardware company named Cisco at No. 2 and a video-rental chain, Blockbuster, at No. 7. Health care, however, was the industry of the moment. The early 1990s was a time of unprecedented growth in the for-profit hospital business. Indeed, by 1992 four of the top ten companies on the list were health-care providers. But Columbia Hospital was the real standout. It debuted at No. 12 and climbed as high as No. 3 in 1994. That year it increased sales tenfold to more than $10 billion by merging with HCA Healthcare and in the process became the world's largest private health-care company. Alas, its growth was not so healthy. Just three years later federal investigators accused Columbia/HCA of massive Medicare fraud, and its stock nose-dived. The hospital chain paid fines totaling $1.7 billion and replaced its CEO. Shares of the company, now known as HCA, have rebounded strongly over the past few years, but today they trade below their 1997 price of $45.

1995--97 The Rise of the Drillers

If any industry knows the difference between a gusher and a dry patch, it's the oil business. And for drillers the mid-1990s was a real blowout. Buoyed by rising oil prices and new exploration technologies, firms such as Global Marine (No. 1 on our list in 1997) swelled in profits. The boom phase for the companies proved to be short, however, since oil prices fell after 1996. Global Marine's fate mirrored that development. After sliding to 18th on the list in 1998, the firm saw its revenue growth dry up quickly and its stock plummet. In 2001, Global was acquired by competitor Santa Fe International. The combined firm, Global Santa Fe, is the world's second-largest offshore-oil driller--and is waiting for its next gusher. Despite a spike in the price of oil, the company recently reported lower-than-expected quarterly earnings.

1998--2000 Tech Takes Center Stage

Tech growth didn't begin in the late 1990s--and it didn't end then either. The phenomenal success of eBay (No. 5 on the list in 2004) is certainly proof of that. Chipmakers and network-computing companies were a big part of the list from the early days. But the Internet frenzy took tech to dizzying heights. The number of tech companies we ranked increased from 26 to 36 between 1998 and 2000. Because FORTUNE required that companies have actual profits to be ranked, dot-coms hardly made a blip on the list despite the flood of web-related companies going public. But Internet strategy consultants and software companies like Siebel Systems cashed in. With employees whose shirt-and-tie dress code differed markedly from Silicon Valley casual, Siebel debuted at No. 1 on our 1999 list, boasting a three-year average revenue growth rate of 218%. The company's profits dwindled when the bubble burst, of course. Siebel has survived, but its prospects appear quite different than they did a few years ago. Then again, it now trades at 262 times earnings. That sounds familiar.

2001--03 The Building Boom

Almost since the moment the air went out of dot-com stocks, economists have been debating whether real estate is the new bubble. Homebuying has certainly taken off in the early years of this decade, spurred on by interest rates at a four-decade-plus low. That has been a boon to both builders and lenders. New-home sales reached a record 1,085,000 in 2003, the highest figure ever recorded in the U.S., according to the National Association of Home Builders. Meanwhile, outstanding mortgage loans soared from $6.9 trillion to $9.4 trillion in only three years. Riding the wave were companies like American Home Mortgage Holdings, No. 2 in 2003, which grew its revenues sixfold to $294 million in just four years. For homebuilders like Meritage (No. 11 in 2003), Hovnanian Enterprises (No. 15 in 2003), and Lennar (No. 41 in 2003), the orders--and the profits--continue to pile up. If real estate is a bubble, it has yet to burst.

The Perennials

The only thing harder than making the list is staying on it. In 13 years, 28 companies appeared four times and nine made it five times. Then there are the three below.

Some Things Never Change

Every year our list has repeat performers. But only a select few return again and again. The variety of their businesses underscores how special--and unpredictable--consistent growth is. Pharmacy benefits manager Express Scripts is one of only two companies to earn a ranking six times. It had $13.3 billion in sales last year, but in late July it announced that its business practices were being investigated by 20 states, and its stock fell despite another quarter of strong earnings. (The company says it has been in compliance with all applicable laws.) Starbucks made the list six straight times between 1992 and 1997. It now serves more caramel macchiatos than ever. Then there's Dell, the only company to appear seven times. The computer maker made the rankings from 1991 through 1993, then lost $35.8 million in 1994. So founder Michael Dell reinvented his company. In 1997, with its built-to-order concept taking off, Dell climbed back among the top 100 growers, and it stayed there for four consecutive years. The reward: Dell's share price is up 18,306% since 1991.