How I could have turned $10,000 into $270,000 in 5 years

This business could an an ASX blue-chip of tomorrow.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

One of the golden rules of share market investing is not to see it as a get-rich-quick scheme, well not unless you bought shares in a market-leading business covered below 5 years ago.

Even if you had struck it lucky with this expectation-crushing growth superstar it would have been a mistake to not own an initially small amount of it as part of a balanced investment portfolio.

After all, not spreading your risk by buying a number of stocks is one of the most amateur investing mistakes going that is surprisingly common as many share market participants tend to 'fall in love' with individual stocks, be overly confident in themselves, or just want to get-rich-quick.

These attitudes are much more likely to lead to catastrophic losses, than striking it lucky with that one dream stock.

So assuming we understand the basics of share market investing, let's take a quick look at one business that would have turned a $10,000 investment 5 years ago into nearly $270,000 today.

The a2 Milk Company Ltd (ASX: A2M) has gone from 56 cents per share on April 2 2015 to a record high of $15.10 per share today, to mean you would have made 27x your investment in just 5 years.

Rather then stewing on missing out on these kind of returns it might be worth considering a couple of qualities this business boasts that will help us find the next a2 Milk Company.

  • a2 Milk's infant formula and supermarket milk appears to have strong pricing power. In that it costs significantly more than nearly equivalent products yet normally price sensitive consumers still lap it up as evidenced by its fast-growing market share and sales. Genuine pricing power in a business is rare and means it has a competitive advantage or moat that could see it grow profits very strongly for a long time. As we're seeing with a2.
  • a2 Milk has genuinely large addressable markets, especially in China, although now latterly in the U.S.
  • a2 Milk's return on equity is 35% which means it's a very profitable business for investors. The higher any asset's return on equity invested the more profitable it's likely to be for its owners.
  • a2 Milk doesn't pay a dividend and its management have reinvested operating cashflows into heavy sales and marketing for more growth, while keeping a super strong balance sheet.

Those are just a few of the signs to look for in a business that could deliver eye-watering returns for smart investors. Even though these qualities are no secret you'd be surprised at the huge number of retail investors who buy poor businesses that exhibit none of these signs.

So why not read on about three more 3 More Blue Chip Shares for 2019 that also tick the boxes for outsized long-term returns….

Should you invest $1,000 in Cochlear Limited right now?

Before you buy Cochlear Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Cochlear Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Tom Richardson owns shares of A2 Milk. You can find Tom on Twitter @tommyr345 The Motley Fool Australia owns shares of A2 Milk. 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. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Person pretends to types on laptop drawn in sand.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a happy finish to the week for ASX shares this Friday.

Read more »

Three people in a corporate office pour over a tablet, ready to invest.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A mature age woman with a groovy short haircut and glasses, sits at her computer, pen in hand thinking about information she is seeing on the screen.
Share Market News

ASX shares in April: 8 key takeaways according to Macquarie

Here are eight key takeaways from April, according to a new note from the broker.

Read more »

Woman looking at a phone with stock market bars in the background.
Share Market News

Market outlook: Should I 'sell in May and go away'?

May is the time to sell... If you believe in fairytales.

Read more »

Five young people sit in a row having fun and interacting with their mobile phones.
Share Gainers

5 ASX All Ords stocks rocketing higher this week

Investors sent these five ASX All Ords stocks soaring this week. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why Block, Corporate Travel Management, Judo, and Zip shares are sinking today

These shares are missing out on the good times on Friday. But why?

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Share Gainers

Why Boss Energy, Capstone, Dimerix, and Platinum shares are storming higher today

These shares are having a good finish to the week. Let's find out why.

Read more »

A shocked man holding some documents in the living room.
Broker Notes

Macquarie's take on Judo Capital shares after suddenly falling 19% yesterday?

Judo Bank was the ASX's top-performing banking stock in 2024.

Read more »