Built for Speed
Fast growers come in all shapes and sizes. This year energy and housing firms star.
(FORTUNE Magazine) – WANT TO SEE HOW MUCH THE world can change in five years? Take a look at our 100 Fastest-Growing Companies from 2000. That list was loaded with tech and telecom firms, and not a single oil company made the cut. In the No. 1 spot in 2000: since-faded new-media phenomenon 4Kids Entertainment. It turns out--surprise, surprise--that Pokémon does not a business model make.
Now look at this year's roster. The turnover has been as dramatic as the evolution of the U.S. economy itself. Technology is still well represented, to be sure. Memory-card maker Sandisk, for example, flashes in at No. 8. Symantec, the antivirus software king and a member of the original Fastest-Growing list from 1991, ranks 65th. But the real action is in energy. Nineteen oil companies are represented--all of them basking in the $2.60 a gallon you're paying at the pump. They include exploration and production companies like Apache (No. 99), oil tanker operator Overseas Shipholding (No. 45), and independent refiner Valero (No. 19). Another industry that's on fire is housing. Among our fastest growers are four homebuilders, three mortgage lenders, and two Florida land developers.
Perhaps the biggest story, though, is Yahoo. Five years ago the Internet search engine was tech-wreck roadkill, its stock in free fall from $119 to an eventual low of $4 a share. Today Yahoo is the hottest company in America, claiming the top spot among our 100 speedsters. (The rankings are based on three years of results, so that other thriving Internet concern, Google, won't be eligible until 2008.)
Yahoo's return from the land of the dot-com dead has been well documented in this magazine (see "Yahoo's Brilliant Solution" on fortune.com). CEO Terry Semel wooed back the big advertising agencies Yahoo's old management had brashly tried to bypass. Meanwhile, the proliferation of broadband Internet access and a widening array of Yahoo content made it possible for advertisers to target Yahoo's 120 million monthly visitors in ever more sophisticated ways. The result has been a transformation of online advertising as well as of Yahoo's bottom line: Earnings and revenues have soared 185% and 78% a year, respectively, over the past three years. And Yahoo now has a business model it thinks it can apply globally. Witness its $1 billion investment in Chinese web-search and e-commerce company Alibaba.com. The loser in the Alibaba bidding was No. 35, eBay, which suffered a blow to its own China ambitions.
Our guided tour of America's fastest-growing companies begins on the following pages with the list itself. From there, we introduce you to our "Seven Stocks to Bet On," which begins on page 83 and identifies stocks from the 100 Fastest-Growing we think will perform best for shareholders. The booklet that appears after page 88 profiles five companies that you might not expect to find on a list of speedsters. Finally, on page 104, senior writer Patricia Sellers catches up with the CEOs of three titans--FedEx, Lowe's, and Procter & Gamble--and finds out how they kept the top line growing even after annual sales soared into the multibillion-dollar range.
Here's a final thought: Something that struck us about this year's Fastest-Growing list is that it's no longer the corporate all-rookie team. Among the 100, 54 have been publicly traded for at least ten years, and 16 are among the 100 best-performing U.S. stocks of the past decade. So, yes, a lot of fast growers disappear. But speed doesn't have to kill, especially when experienced hands are at the wheel.