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In fact, I have a single sentence for you this week from Part 1 early in the book, and I quote, "Those who inveterately wait to buy on dips, very likely miss or badly have to chase the best-performing stocks of this or any era." That's this week's page Breaker preview. To pre-order my final word on stock picking, shaped by three decades of success, just type Rule Breaker Investing into Amazon.com, barnes&noble.com, or wherever you shop for fine books. Thank you to everyone who's pre-ordered. That means a lot to me. My talented producer, Heather Horton will be bringing some sound to our stories this week. In fact, I think I may have picked a bad night to invite my Foolish friends to the campfire because it's snowing. I'm looking out the window, it's snowing here in Washington, D. C. as we record. It's cold around this campfire this time. Anyway, Heather, I'm going to ask you to cue up a sound effect to set the mood and welcome each of my Foolish guests as they come in one by one. How about something to start us off for Story Number 1? Indeed, that does help us set the right tone here as we welcome my friend Andy Cross. Andy, welcome back to Rule Breaker Investing.

Andy Cross: Hi, David. Great to be back here. Thank you.

David Gardner: Always a delight to have our Chief Investment Officer at The Motley Fool on this podcast, Andy. I'm looking forward to next month because March Market Cap Madness is coming, and you're in the final four, so I'm getting pumped up about that.

Andy Cross: As am I, David, I can't wait for that. That is always a really fun event. That'll be great.

David Gardner: It will be great. It'll be a lot warmer than it is around the campfire this particular week, Andy, as we settle in here, and you cue up your story, did you watch the Super Bowl?

Andy Cross: David, I am an Eagles fan, so, of course, I did watch the Super Bowl.

David Gardner: They did indeed fly. Andy, did any of the Super Bowl ads jump out to you this year?

Andy Cross: Well, I have two young daughters, so we always watch the ads and enjoy those. Yes, I really enjoyed the NFL flag football one with the girls, the whole high school call back to the 1980s of when I was in school. That was so much fun, and I found that just very positive and really enjoyed that.

David Gardner: Thank you. I did too. It wasn't a great game, although as an Eagles fan, I think it was a truly great game for you. The rest of us were left a little wanting, so the ads counted for more this year. Andy Cross, what stock are we talking about here for Story Number 1?

Andy Cross: David, we're talking Copart.

David Gardner: Excellent. Ticker symbol?

Andy Cross: CPRT.

David Gardner: I have asked each of my guests around the campfire this week if they might title their story. Andy, is that something you had time to do for this one?

Andy Cross: I certainly did, David, yes.

David Gardner: What is your title?

Andy Cross: David, my title is From Rust to Riches: Turning Trash to Cash With Copart.

David Gardner: Wow. Andy Cross, take it away.

Andy Cross: David, once upon a time, back in the early 1980s, there was a 35-year-old entrepreneur named Willis Johnson. He was a Vietnam veteran who earned the Purple Heart. He learned about business from his father, like many of us do, who didn't have a high school education, but worked in a variety of businesses and owned a farm. Well, Willis actually milked cows and learned the art of starting, owning, and running a business. Willis, by the early 80s, had bought a series of junkyards, and he created the business known as Copart in California in 1982 that deepened the partnership among salvage yards, insurance companies, and buyers, and hence the name, David, Copart for co-partnership. This is a new concept in this market, really, and it specializes in auctioning off wrecked cars for reuse or for spare parts, and it became a pioneer in the auto salvage auction industry where it went on to create a global market for salvage and used cars. But importantly, David, it builds this streamlined system where insurance companies and dealers pay Copart to move cars off the lots and sell them to dismantlers, rebuilders, and hobbyists looking for pieces of scrap metal or for parts. That really had not been done in a way that's really scalable, and Willis Johnson invented that.

David Gardner: From humble beginnings, great things, great Rule Breakers can be born.

Andy Cross: Absolutely, David. This is a real entrepreneur, Willis Johnson was a real entrepreneur, and he started this business. Like I said, he had bought some junkyards, and he started it. But where it gets really interesting for us as investors is in 1984, Copart goes public. He wants to fuel the growth, and at this point, it has about 42 local salvage yards, and he wants to grow this into a national nationwide network. The IPO was priced at about $12 now on [inaudible] lit adjusted basis, David, that's 12.5 cents. You might see where I'm going with this. Willis and his family retained a large ownership as much as 30%. Where things get really interesting, again, this is the mid-'90s. Those of us who were investing or just alive at that point, really understand what is coming next in the late '90s.

Copart really started to push the business online, and it created a bidding system that allows buyers and sellers from all over the world to connect and bid on cars and have them shipped. This moves and pushes the company into the digital error, and it set it apart from traditional salvage businesses and other competitors, and that really helps the stock gain momentum. By the turn of the century, the stock had gone up to a split-adjusted one-dollar price from 12.5 cents for its IPO to one. Nice. It peaked at more than two dollars in 2002 before getting gutted during the sell-off to about 50 cents, so more than half by 2003, when it enters its first international market, David. Up until now all US, it goes into Canada, and then it goes into the UK in 2007, and by that time stock had rebounded back to above $1.50. That's when I first started learning about it.

David Gardner: Part of what I love about this story already, Andy, is that there's such a storied past to this company. It wasn't a brand-new IPO. This is a company that had been public for a couple of decades before you even started paying attention to it, or I did either. We have some friends at the Fool. We're always supported by analysts and others, and I remember that this started to come online in terms of being interesting to you and to some others around the Fool.

Andy Cross: David, this is where, like I said, in 2007. It had been around for more than a decade, then it went public, and then that's when I first started learning about it, and we actually brought it into stock advisor on Tom's side of the scorecard when it was a sub-three billion-dollar company, but it had this growing footprint. It had huge scales. By now, it had more than 120 salvage yards and about 30% market share. It had these impressive financials, it was pushing it into digital, and, of course, it had the founding story with Willis. Then, David, you ended up adding it to the rule-breaker service as well. I actually had the fortune to interview Willis, and he had these stories about collecting scrap metal on the sides of roads, and he was just a real entrepreneur, a real made-in-America, apple pie entrepreneur that we just love to study and follow. But this is where the stock starts to get really interesting, and it taught me a very valuable and painful lesson, David.

We had recommended a split-adjusted about $1.87 and the stock advisor. Within four years, it had gone up 50% to around three dollars. David, this is where it's painful because we decided to sell it out of the stock advisor. Primarily because the scrap metal prices that it's tied to were starting to fall and its growth was slowing, we were just worried about some short-term dynamics. You held onto it in the Rule Breaker and that was very smart, because from that time, during the great financial crisis, it had fallen more than half its value, but then it regained all that value Back to above three dollars, and eventually that stock goes on to go up 19 times in value from three dollars back then to $58 to where it is today. Fortunately, for Rule Breakers investors, it's still part of the scorecard, but it's a very valuable lesson for me as I think about balancing short-term dynamics with long term dynamics, and Mr. Johnson still owns 54 million shares and is worth more than three billion dollars today. Finally, David, my lesson, it's never too late to buy a great business because I finally myself purchased Copart for the very first time just last year.

David Gardner: I love it, Andy. There's an Alpha and Omega to our campfire stories this week because I'll be ending with a story that has some similar dynamics to it about how you can miss something for a long time and show up. You think maybe late to the campfire, and it turns out you're OK. Andy, I really appreciate that story. I want to give credit to Karl Thiel at The Motley Fool, because it was Karl who brought it into Rule Breakers, and our cost was a buck 89. It was April of 2009. I remember Karl had gone a field trip. A few of our rule Breakers went out west to California, and they visited Copart and saw what was by then, an Internet operation and just saw, it felt like you're looking at NASA because there's TV screens showing all these different cars and parts everywhere, it's all moving around. I remember Karl talking about that then. But I can certainly sympathize with selling stocks early. We've all done it. I just think about 2009, especially with such a hard time, 2009-'10. Really dubious times, so many of our stocks had lost a lot of value. I personally wish I hadn't sold Arm Holdings out of Motley Fool's Stock Advisor back then. But can you just remind us as we end this one, what was the title of your story again, Andy?

Andy Cross: David, my title of my story is from Rust to Riches: Turning Trash to Cash With Copart.

David Gardner: As elegantly titled as it was told. Andy Cross, thank you for sharing that valuable lesson. Maybe it's the lesson we can never say too much at the Motley Fool. It's understandable, especially as advisors, stock pickers ourselves, where communities are reliant on what we're doing. When you do see something in the near term and it looks like a catalyst for good or ill, and sometimes we do pull the trigger or not based on those nearer-term calculations or observations. The good news, Andy, is that when we don't, when we actually hold on, those investments, and you have many of them, tend to make us forget all the ones that we may have let go or, in fact, just picked really bad stocks like I've done for Motley Fool Rule Breakers for a few decades. Andy Cross, what a delight. Thank you for joining me here at the start of our cold campfire evening.

Andy Cross: Thanks, David. It's been a real pleasure and always great to talk stock stories.

David Gardner: I'm rubbing my hands together a little bit because it's cold here at the campfire, but I'm delighted warmly to be joined by our next guest, Kirsten Guerra. Kirsten, welcome to Stock Stories Volume 10.

Kirsten Guerra: Thank you, David, for inviting me to potentially the coldest day of the year to do a campfire.

David Gardner: Why did we pick this one? I don't know, but we did. In fact, here at our cold campfire, Kirsten, are you wearing anything produced by a favorite public company of yours? With Peter Lynch, buying what you know, what are you wearing?

Kirsten Guerra: Well, David, as I think we can both see, I'm wearing a prominently emblazoned Costco hoodie. One of my favorites, but I have to say, as an introvert, it does gather a lot of attention, many people feelings to comment on the Costco hoodie.

David Gardner: [laughs] Well, I'm delighted it's keeping you warm tonight. Let's get into Stock Story Number 2. Kirsten, what stock, first of all, are we talking about?

Kirsten Guerra: The stock today is Axon Enterprise.

David Gardner: Ticker symbol?

Kirsten Guerra: Ticker symbol AXON. I hesitated for a moment because when I first invested, it was a different ticker.

David Gardner: I remember I think it was TASR.

Kirsten Guerra: I think it was different, maybe they've gone through multiple.

David Gardner: I bet that they have. More importantly, Kirsten, what is the title of your story?

Kirsten Guerra: My title is Going to be Ignorance is Lucrative Bliss.

David Gardner: Excellent. Take it away.

Kirsten Guerra: Once upon a time, a young woman, not that young, but definitely younger than she is now, joined the Motley Fool. It was 2019, and it was me. I can't tell the whole story in third person. It was me. I joined the Fool as an employee. I was an investor, personally, but I was not an analyst at the time. I joined on the editorial team. But regardless, I was here. I decided to peruse the wares, and I saw that you, David, had recommended a little company called Axon Enterprise. Just at just under $52 per share, I invested. Now, ask me what my thesis was, David.

David Gardner: I would like to do that. What was your thesis at the time?

Kirsten Guerra: I don't know. I was just listening to you. I just took your recommendation. [laughs] Truly, I didn't know what I was doing. I probably didn't know fully what a thesis was. I did read the recommendation, and I'm sure I thought that you made some excellent points, and it was a business in a sector I had no exposure to. Just thinking diversification, it seems like a good idea, and I invested. That's me. I bought in at that time. But what was Axon up to? Well, in 2019, they were, as you may know, pushing new all-time highs for their business, they were growing revenue at an accelerated pace.

When you first recommended Axon long before my 2019 purchase, it was just the TASER company. But by 2019, it had already exercised quite a bit of optionality. It was launching its Axon Body 3 body camera hardware. In 2019, it grew ARR by 49%. It had annual recurring revenue because it had launched a SAS product, evidence.com. This was essentially a Cloud-based repository where all that body camera data was collected and processed. By 2018, Axon had a lot going on. I'm underselling my knowledge of the business at this point in time a little bit intentionally. I did know the basics, and I knew how the company was making money and how it was expanding into a recurring revenue model. But what I mean to stress is that I didn't have a detailed thesis. I didn't project any numbers, I didn't build the DCF, didn't know what DCF meant at the time, discounted cash flow of the company's next five years. I made no valuation assessment whatsoever. I just thought business seems to be crushing it. Sounds good.

David Gardner: It is one of those companies that started as one thing and then saw optionality that it could start bolting on another thing and then another thing, and it really did start, as you know, Kirsten, with the taser, but then adding the police body cameras, the Axon part of it, and then having in the Cloud, all of those videos that need to be stored for all of those police departments around the United States and increasingly the world, that video has to live somewhere, and that added that software as a service model. This company really completely morphed over the course of the last 15 years.

Kirsten Guerra: That's exactly right. Then, 2020 happened. The whole market fell, Axon, along with it, but even down, I say this now, looking back, it was nearly 300 times price to earnings or 60-70 times forward earnings, if you want to look at it that way. Knowing what I know now, I'd say, that sounds expensive, and at that time, it was more expensive than my first purchase. We're talking around $80 at that point. But fortunately, I didn't really know how to value something in 2020 and so what I saw was that Axon had been performing quite well. It had accelerated revenue even further so it was going faster than it was before. It had launched its real time operations platform, Axon respond for 911 calls. Rather than steer clear, I made seven different purchases of Axon across 2020.

Now, they were all very small, but seven purchases. I honestly didn't even remember that until I checked today for this podcast. I was shocked. No, so quickly catching us up, late 2022, I joined the investing team as an analyst. Axon, meanwhile, two years later, had accelerated revenue growth even faster to 38% year over year and it launched a drone program, so it just kept exercising that optionality we talked about. Yet, even then, in my 2.5 years of working full time as an analyst now, I've never dived deep into this stock. Despite owning it, despite it quietly growing in my portfolio, I was focused on developing, investing fundamentals and researching new companies. But do you know what founder and CEO of Axon Enterprise, Rick Smith was doing? He was applying his company's mission statement," To protect life by using technology to make the world safer". He was applying that more and more broadly every year.

David Gardner: Love hearing you rock, the mission statement, looking at the purpose of companies often is one of my first steps as an investor when I'm researching, because I really want to be invested in companies that are doing things that I at least approve of, but often I hope that I love, and that's a great example.

Kirsten Guerra: That brings us to today. The reason I have stressed how relatively uninformed I personally was about this business when I invested in it is because of how highly I think that contrasts with the fact that Axon today at now around 665 ish dollar per share is my largest holding. It is 12% of my portfolio.

David Gardner: Phenomenal.

Kirsten Guerra: I've still done no valuation work on it. I don't really keep up with it closely, at least relatively, not as much as some of my much smaller positions. My first purchase is up 1,200%, and even the worst performing Axon purchase I made from that time is up just over 700%. I've never sold any of it. Had I known two years ago what I know now about how to perform valuations, I might have sold some. I might have trimmed it. Yet what I actually know now is that that attempt at valuation likely would have hurt me, because truthfully, David, just between you and me, I'm not an expert in police enforcement. I can't accurately predict how Axon might expand its mission into yet another new product line. But what I do know, maybe all I ever needed to know about this business, is that this is a company run by a passion and founder with a clear track record of capturing optionality at high ROI, all within his company's stated and clear mission to protect life.

David Gardner: Really appreciate that and talking about return on investment, which means a lot to us at the Motley Fool ROI, that attached to something that is good for the world. I think security in that business is non lethal weapons are good for the world and that can scale, industrywide, nationwide and globally. Often, I think, Kirsten, some of our best investments as investors and some of our best picks of the Motley Fool have exhibited those traits so I appreciate you pointing that out. What was the title of your story again?

Kirsten Guerra: The title was Ignorance is Lucrative Bliss.

David Gardner: Thank you for that reminder, because it is obviously intuitive for us to think that some of our earliest investments when we didn't necessarily know what we were doing have ended up being our best. But I think at least one lesson I can take away and we can share here at the campfire is, part of the reason those investments have been so good is because they've had the most time, and if you give the market time, it's time in the market, not timing the market, as is often said, it's a cliche these days, but it really is true. Kirsten, congratulations on being an Axon Enterprise shareholder. It has been a phenomenal performer and I even look at the stock chart here. I do note that in 2022, it dropped from 200 down to below 100. Newer investors and more seasoned investors all had the stomach getting cut in half, which happens frequently if you want to hold a great company over time. It almost doesn't matter what company you're going to have to suffer. The slings and arrows of outrageous market treatment, as Axon Investors did in 2022. Kirsten, great to be with you again. Thank you.

Kirsten Guerra: Thank you for having me, David, and thank you for the initial recommendation.

David Gardner: From Copart and Andy Cross to Axon Enterprise and Kirsten Guerra, we next welcome Jason Moser. Jason, a delight to have you back to Rule Breaker Investing.

Jason Moser: Yes, sir. Thank you very much for having me. Always a pleasure.

David Gardner: Welcome to the cold campfire tonight. Jason, as we stare into the campfire, I'm wondering your approach to smores. Are you more of a golden brown marshmallow purist, or do you like yours burnt to a crisp?

Jason Moser: David, I grew up. I did a lot of scouting. I was a cub scout. I was a boy scout. I did all of that stuff. I got to say, I'm a fan of the burnt marshmallow. It doesn't bother me so much. I like my coffee dark. I want it to show up on a drug test. I like having that burnt marshmallow flavor to it. I'm going crispy.

David Gardner: Excellent. Well, we will do that here tonight then. Jason, speaking of stocks, though, what stock are we talking about?

Jason Moser: Well, we're going to talk about Zoetis today. Ticker is ZTS.

David Gardner: Thank you. Zoetis, ticker symbol ZTS. Jason, what is the title of your stock market story?

Jason Moser: It is a wonderful companion stock.

David Gardner: A wonderful companion stock, stock number 3. Jason Moser. Take it away.

Jason Moser: Once upon a time, well, David, this is dedicated to Duval, Piper, Dormi, Wally, Ryder, Effie, and even Crom and all of the other pets and animals out there in the world, That doesn't make any sense. Those are all the animals that we've owned in our lifetime, at least as an adult, but this dates back to when I was a child. I am just a big fan of pets. We're pet lovers. We have three dogs. We have a cat in our home today and so Zoetis is a company that just stood out to me from the very beginning. It's a company that spun off from Pfizer back in 2013. Fun fact, though, the company was actually founded in 1952, so it's older than-

David Gardner: I love it.

Jason Moser: But Zoetis is ultimately responsible for the discovery, the development, manufacture, commercialization of the animal health, medicines and vaccines and diagnostic products that we utilize whenever we take our pets to the vet, but it's neat. They go beyond just pets. It's livestock as well. You're talking about things like cattle, swine, poultry, fish, sheep. They cover the entire spectrum, which is really neat, and interesting thing I learned David, according to the World Animal Foundation, and there are other sources to back this up, there are approximately 900 million dogs in the world alone today. Now, more than 470 million of those dogs are kept as pets. But I think that just speaks to, this is a big world. It's not just people. We have a lot of animals, and we need to take care of them, and Zoetis is a company that really is focused on making sure that we can do that.

David Gardner: I totally agree with you in terms of, well, first of all, who's not going to agree that we should take care of all the animals? Thank you for that. Two by two, they came into the arc and these days, there's 900 million of them. I love it. I will certainly say one company in this space that I've got to know as a stock advisor pick has been IDEXX Laboratories, which is tangentially related, but about half the market cap of Zoetis, which is a bigger dog, so to speak. Keep going, Jason.

Jason Moser: Nice. Well, I'm glad you brought IDEXX up because I eventually would have, because I'm a shareholder in both, David. Thanks to you, at least in regard to IDEXX. I've owned IDEXX shares for a long time in Zoetis, as well. To me, the fun part about this company in regard to Zoetis, as I mentioned, we have pets. We've had them for a long time. Basically, it's a lifestyle for us and it's always fun for me whenever I go to the vet, because while I don't enjoy actually taking my dogs or cat to the vet, I do enjoy the conversations that I have with our doctors there because they, while by profession, are veterinarians, of course, they are big stock guys. It's a tremendous practice. They run here at Potomac Valley Veterinarian Hospital, they're brothers, and they love to talk stocks, in say, every time we go in there, we talk about things like IDEXX and Zoetis. But that was one of the things that really struck me back in 2018, my first bought shares of Zoetis. Shares were around $87 and change at that time, and for me, it just became obvious that look, this is something that I do every so often, every few months, I have to take one of our three dogs or the cat or whatever. I'm going to the vet all the time. Why not make sure I'm paying myself along the way? That's what it feels like when I go to the vet there is, and I'm paying myself along the way. It was really fun to see, around August 2021, we saw the COVID stretch there where it seemed like pet adoption was picking up there, and a lot of people were adopting pets and taking that.

David Gardner: Many of us thought we would be locked down forever. Well, or the market at least thought that.

Jason Moser: I felt that way at the time, for sure. But we saw the stock really, it was amazing. It topped $200 per share at that point and it's pulled back since, but I think it's worth noting since the company spun off from Pfizer in 2013, shares are up 500 plus percent. This has been a very good investment. For me, it's been a good investment because I've held it since 2018. Going back to that point you were making there about just hanging on to things, just letting patients and what time do they have a lifting? That really is, I think, something that has played out here in regard to Zoetis, because it's non negotiable. We need to be able to take care of our animals, whether it's pets or livestock or whatever. Like I said, it's a big plant. A lot of animals, got to take care of them and animal medicine is a big market opportunity.

David Gardner: It's a fun company as well, because it is, as you pointed out, Jason, a spin off and often, spin offs don't have a big IPO of their own. They're sometimes a secondary consideration or almost a secondary offering, in this case, coming out of Pfizer. They don't necessarily have as much research behind it or as much Wall Street savvy, although at a scale of Zoetis, it certainly was a known entity when it came. But I really appreciate you bringing a spin off and talking some about it because some of our better investments as investors over the course of time can come from these secondary companies, and Zoetis is certainly one. I admit I didn't exactly know how to pronounce the company name when you dropped me the line that you'd be talking about Zoetis. Now I'm clear on it. I'm also clear that its market cap is $78 billion, about twice IDEXX labs, which is Ticker symbol IDXX, as well. Jason, could you remind us of the title of your story again?

Jason Moser: Yes, the title of my story is quite simple, a Wonderful Companion stock.

David Gardner: I now get the pun.

Jason Moser: Yes, I look at my dogs and our cat, and I think, wow, this just fits perfectly.

David Gardner: Do your veterinarians own the stock? Do you talk about that with them? They should.

Jason Moser: I don't know if they specifically own it. They're big index funds, guys. I always guide them to the index fund. When all else fails, just make sure you buy the S&P index fund, but they absolutely are big fans of IDEXX and Zoetis as companies. They're big customers, and so they've had a lot of great things to say, and that's a terrific lesson to take away from this, honestly, you speak with people in the profession. It's like those old school channel checks that we used to do here. When you learn from people in the actual profession, one of the reasons why I was so compelled by these as investment ideas was just from speaking to my veterinarians. Hearing the positive things they had to say about IDEXX and Zoetis, I thought, well, that makes sense.

David Gardner: It really does, and it does make sense to ask people who know what they're doing what they think of stocks that we're researching. I really appreciate that, Jason, and thank you for bringing this company to the campfire and being here with us on this cold night. Foolish best, my friend.

Jason Moser: Thank you for having me.

David Gardner: Well, we're more than halfway through. Jason referencing talking to veterinarians about Zoetis reminded me of a great line. I once read Montane, the great French essayists complete essays, and I remember highlighting this quote at the time, and it comes back to me, and it speaks perhaps more eloquently, although in slightly stilted older language, the truth that Jason just threw down here at the campfire. Montane wrote, "I observe in my travels this custom ever to learn something from the information of those with whom I confer which is the best school of all others and to put my company upon those subjects, they are the best able to speak of." There it is, of course, that would have been written in French, not in English. But I do love that phrase ever to learn something from the information of those with whom I confer which Montane called the best school of all others and to put his company upon those subjects, they're the best able to speak of. Well, rubbing my hands together again. It is cold out there. It's time for our fourth guest and our fourth sound effect. Queue it up, Heather, make it happen. Here he is my friend, Sanmeet Deo. It's great to have you back, Sanmeet. Welcome to the Campfire.

Sanmeet Deo: Hey, David, thank you. Thanks for having me.

David Gardner: Sanmeet, here we are gazing into the flames of the fire and I'm wondering if you could have a mystical stock market vision, if gazing into the flames, you could see one stock's future. Which one would you want to reveal?

Sanmeet Deo: I think I would want it to be Tesla, because gazing into the future of Tesla is essentially like gazing into the future of humanity and the world, and what are cars going to be like? What are humanoid and robots going to be like? What is the future going to look like, I think we get a good look at what's actually coming.

David Gardner: That is a great answer, and I'm here to tell you, I think it looks good, but I can't tell you what the price will be 25 years from now.

Sanmeet Deo: Exactly, definitely. I would like to see that as well, though.

David Gardner: Thank you for rocking, Tesla, a company that many listeners own, and I do, too. I bet you do, as well and what a phenomenal Rule Breaker. Sanmeet, what stock have you brought here, story number 4 to our campfire?

Sanmeet Deo: I'm going with Crocs ticker symbol CROX.

David Gardner: I love it, Crocs. I'm not saying it's the opposite of Tesla, but it's not like Tesla, is it?

Sanmeet Deo: A Tesla of shoes. [laughs]

David Gardner: Is that your title, or what is the title?

Sanmeet Deo: No, now that I think about, it could be, but I have another one. It's from Ugly Duckling to Swan.

David Gardner: From ugly duckling to swan. Sign me, Theo. Take it away.

Sanmeet Deo: Once upon a time on a boat, sailing in the Caribbean in the early 2000s sat three avid boaters and friends who were looking for the perfect footwear for their maritime adventures. They stumbled upon a foam-like material called a cross made by a Canadian company called Foam Creations. It was lightweight, comfortable, and water-resistant. Perfect elements for a boho. They acquired the rights to manufacture this shoe using that material and launched their first model, aptly titled The Beach in 2002 at the Fort Lauderdale Boat Show, selling all 200 pairs on hand. Thus, was born possibly the ugliest shoe on Earth cross.

David Gardner: Now, I like my crocks, I mean do you have crocks? I know you up in the story, but I know everybody says it's ugly, but they're awesome. They're so lightweight. They're so comfortable and they're so summery, so the opposite of this campfire tonight.

Sanmeet Deo: Exactly. I see basically every kid gliding my own wearing crocks wherever I go.

David Gardner: I'm a shareholder, too, but let's not jump too far ahead in the story. Take it away again.

Sanmeet Deo: Four years later, after the company went public at $21 per share, the rubbery whole field clogs bore the brunt of fashion jokes and ridicule, people calling them orthopedic shoes or perfect for gardening. Wall Street analysts thought This is a novelty, limited appeal, niche, small customer base, but who else is going to buy these? They also called it something you like, David. It's overvalued and overhyped. But the brand grew popularity. Sales soared, sending the stock price to a peak in 2007 to around $75. But then 2008, financial crisis. Sales slid. I guess people started to realize, hey, these are uncool. Stock price hit its lowest in 2008, closing at $1.24. They closed numerous stores.

They were teetering on the brink of disaster. But Croaks didn't give up. They began to refocus his core product, having branched off into so many other styles, closed underperforming stores, started to emphasize comfort and functionality. They even embraced the ugly aesthetic. They had collaborations with celebrities like Post Malone and Bad Bunny, designers introduced the fashion element. Were gaining buzz on social media and the Internet. They began seeing a resurgence, and by 2019, stock closed around $42. In 2020, a different crisis, the pandemic. This proved to be a boon for the company as people started to stay home, prioritize comfort over style. Revenues shot up 1.2 billion in 2019 to 2.3 billion in 2021 to 3.6 billion 2022, and currently around 4 billion. Nurses love the shoes as they're walking all around the hospitals, treating numerous patients. Kids embrace them, and they usually wear them all the time as it is. Their sales just skyrocketed and the buzz just began to change. It began to be cool to be uncool. The Ugly was embraced. Their stock actually hit its peak in 2021 at $180.

David Gardner: Which is a fair side higher than the dollar and change you mentioned earlier in the company's history. What a phenomenal run. In fact, I think you said something like $1.80, and then I think it hit something like 180. From its low lows, at a dark time, it became 100 bagger.

Sanmeet Deo: Absolutely. For many years this is a stock I own, myself, as well, have considered it for services here and for other things. Usually, the first thing that people say is, but those shoes are ugly. It's a fad. It was a fad for a little while, and they gained some popularity, but who knew that they started refocusing back onto their core clogs and shoes, and it took off. Now they even something along the lines of what Jason was talking about earlier was now they even are starting to make little dog crocks. They've sold out on those, too. It's amazing what they've been able to do with that one little fabric material.

David Gardner: It really is. Since I always like playing, even when we're not officially playing the Market Cap Game Show, it's worth pointing out that Crox's Market Cap is still only about $5 billion today. This is we're not talking about a company that says Sketchers, or certainly a Nike or Adidas kind of We're talking about still a small cap company even where croaks exist today.

Sanmeet Deo: It still has a long road to go in international markets, too, so that's a huge area of growth for them there.

David Gardner: Do you want to highlight a primary takeaway lesson here, Sanmeet?

Sanmeet Deo: This is a classic story of resilience and reinvention. When you're kicked down, when people are calling you names, what do you do? Do you just sit there and take it, or do you get back up? Do you reinvent yourself? Do you focus back on who you are, with the core of what you are, and keep trucking ahead? Sometimes you just have to hit that moment. When you hit that moment, like they did in the pandemic especially, you catch fire. Then when you catch fire, you keep going with that. It's a great story of resilience and sticking to your guns, even when people are telling you that you can't do it.

David Gardner: It feels even more right here in front of this cold campfire. You said when people kick you down, I think what you need to do is you need to get back up and say, kick me down again, except ten years from now, you'll be wearing crocks. Kick me down with crocks. A generation earlier, Peter Lynch, who influenced many of us, me included, used to make a lot of companies that sounded silly. He played up the Pep Boys in his book, Many Mo and Jack, and he would point out things like legs and other just seemingly silly things that Wall Street guys wouldn't take to, and Lynch favored those stocks because I like to think in a more modern era, he would have liked Lulu lemon, things that don't really appeal to Wall Street Machismo all of a sudden can take off because they were kind of out of favor. They just didn't look cool to the cool kids. Crock is obviously a modern-day example of that. Well, Sanmeet you didn't exactly wear crocks here to the campfire tonight, but I understand why because people don't wear do they wear crocks with socks.

Sanmeet Deo: Absolutely.

David Gardner: I for Saturday Night Live fans, I think I may be rocking and mean there. But we're not wearing crocks with socks tonight at the campfire, but Sanmeet Deo there, thank you so much for bringing a story number four. What was the title again?

Sanmeet Deo: From Ugly Duckling to Swan.

David Gardner: Well said. Thanks so much. Well, thank you again to Andy Cross and Copart, Kirsten Guerra and Axon Enterprise. Jason Moser and Zoetis, Sanmeet Deo and Crock. Here I am. Here we are. It's you and me. It's lonely. Everyone else has left the fire. It's cold, and Heather's about to produce our final sound effect. The stock I want to talk about, well, I'm going to hold off on saying the company name or the title for just a minute or two. It first IPOed on December 12. It was probably a cold day. That day, 1980 the initial public offering was priced at $22 a share. The company offered 4.6 million shares that day, and it closed. It jumped up, I think, 22 to 29. This company raised just about $100 million in 1980 December. That was the biggest raise by any public company since Ford in 1956. It closed that day with a market cap of $1.8 billion.

The company I wanted to talk about is Apple. Ticker symbol AAPL, and the title of this story is the Apple that keeps ripening. If you want to follow this company, and no matter how old you are, I'm 58. You might be older than I am. You might be well younger. Apple has been around for your lifetime. To give at least one of my lessons upfront, I hope you'll feel like you haven't missed it. Great companies like Apple. Not every company is great, but truly great Rule Breakers like Apple, you've never missed it. At any point, you could hop on board. I said earlier over the campfire to my friend Andy Cross, what he said about Copart that you could just buy. Even if you missed it for a decade or two, you could buy again. That's obviously been true of the company that I'm featuring Apple. I took a look at Apple through the decades. 1990, January 1, right through to 12-31-1999. That decade, stock tripled. The stock tripled through the 1990s, but all of that trip came in the last nine months of 1999. If you were an Apple shareholders, starting in 1990, you waited about 9.5 years and you'd gone sideways with the stock. There were lots of reasons for that. We're not going to cover a full history of Apple. You could read about it on Wikipedia. There are books. I'm sure streaming video stories about the story of Apple, but it's worth pointing out that you had to wait nine-plus years through the 1990s to get any return at all on the stock. Do you remember the stock market in the 1990s? It was on fire but right at the end of 1999, at the end of that decade, all of a sudden your stock tripled. It went from modern-day $0.30 or so to $1 per share. I started the next decade then at $1 per share and from 2000 through 2009, Apple's stock went from $1 to $7.50. It was up 7.5 times in value throughout the early 2000s, the aughts, as some people sometimes.

I came on board with the first recommendation from Motley Fool Stock Advisor on January 18, another cold day, another cold month, January 18, 2008. I remember remarking in that initial by report, and by the way, if you're a Motley Fool member, you can access all of our buy reports. The initial buy reports of Nvidia or Netflix or any of our big winners, you can find my first Apple buy right there. I remember writing something to the effect of no one yet picked this at our company, The Motley Fool. It was surprising to me. I was like well, this is the first time we've actually picked Apple's stock. At the time, we had thousands of comments, thousands of people on our forums, saying, You guys should pick Apple. A year before the iPhone had come out, that was certainly a catalyst for me recommending the stock. Stock was at $4.89 when I recommended it in January of 2008. Of course, the stock market wasn't kind over the next few years, though Apple would close that decade, as I already mentioned, at $7.50. What did Apple do through 2010 to 2019? Well, it went from $7.50. It closed the decade at 75.

Almost exactly a ten-bagger last decade. How has it done so far this decade? Well, Apple, having started 2020 at 75 today it trades right around 235, so it's about a triple in the last five years. There are a lot of lessons that any investor Foolish any rule Breaker investor can pull out of Apple, but maybe I'll just highlight a few in closing. The first is for great companies, great Rule Breakers, you haven't missed it. I can tell you, when I was surprised to find nobody else had picked Apple yet at the Molly Fool, I was thinking, Man, have I ever missed it? Have we missed it? That's how I felt when I picked it in January of 2008. The stock is actually a 48-bagger since then. It has just been a phenomenal performer, and it's just a reminder you haven't missed it. You haven't missed Amazon. You haven't missed Nvidia. You haven't missed Tesla, especially those who may not own those stocks, especially those who don't own them today, who may once have owned those stocks and sold, often we conclude we missed it and we don't go back. That is to your detriment as an investor because all that really matters is what happens next. Do you think people working at Apple or Tesla are just giving up and saying, well, we're too large now? We probably can't create any value from here. No, that's not what the leadership of those companies think. That's not what the workers who go to work every day for those companies think either. You shouldn't think that way as a stock market investor. You haven't missed Apple. Turns out I hadn't missed Apple picking it and holding it since January of 2008. Another lesson, I guess, is worth mentioning briefly, founders can be succeeded greatly. Tim Cook showed up in 2011.

The stock was at 15. Today, as I mentioned, the stock is around 235. Tim Cook has added more market cap to Apple than Steve Jobs ever did. Both of them are phenomenal leaders at different stages of the company. But it's worth pointing out, it's been a 16-bagger over Cook's 14 years. He's done a fantastic job succeeding the storied founder of the company. Then the last lesson, I had to look this one up, but I did take the time, so I want to share it. I'm looking at a Bloomberg article from March 21 of 2011. Here's the headline of that Bloomberg article, "Buffett to extend aversion toward Apple Electronics Makers." That is the headline of the Bloomberg story. It begins. Warren Buffett said he'll probably prolong his aversion to electronics makers such as Apple Inc because their business prospects are harder to predict than companies such as Coca-Cola. We held very few in the past, and we're likely to hold very few in the future. The billionaire chairman of Berkshire Hathaway said in Daigo, South Korea, today, referring to electronics makers, Coca Cola based in Atlanta is very easy for me to come to a conclusion as to what it will look like economically in five or ten years, and it's not easy for me to come to a conclusion about Apple he said. Now, since the article that I'm citing was written in March of 2011, Apple is up 21 times in value. Coca-Cola has doubled. The big joke here is that while many Fools like me still own Apple, and it's up dozens of times in value, Buffett eventually accumulated a stake in Apple worth more than $100 billion.

I guess we can say he changed his mind. Many of us do have a way lower cost basis, though, but Warren has made tens, probably hundreds of billions of dollars on his Apple holding that he was averse to as recently as 15 years ago. That's where I'll end it. My story. The apple that keeps ripening and I hope some lessons for you, my fellow rule-breaker listener. Well, thank you again to Andy Cross and his story about Copart. I loved his story about the founder. Thanks to Kirsten Guerra for shining a light on her best stock market performer yet as someone who has a long future ahead of her as a Foolish investor. Jason Moser understands the importance of investing patiently in companies that do good things for our world at large. I didn't say it at the time, but I'll say it over the campfire to you now. Principle number one of the rule Breaker portfolio is to make your portfolio reflect your best vision for our future. Thanks as well to Sanmeet Deo for finding humor and how people put down a fad stock, people kicking you down with feet that may one day be sporting crocks. Thank you to my producer Heather Horton, for bringing the fun, bringing the warmth of sound to our stock stories this week, thank you finally for you, staying with me to the end, keeping me company over a cold campfire this time of year. This week, I hope you'll remember my story about Apple, too, and the sweet fruits that are born of investing when it is truly and well done, over time, investing into companies that do important and good things in this world and keep doing those at scale for decades. Good night, Fools.

Mary Long: As always, people on this program may have an interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Learn more about Rule Breaker Investing at rbbi.fool.com.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Andy Cross has positions in Amazon, Apple, Axon Enterprise, Berkshire Hathaway, Copart, Netflix, Nvidia, and Tesla. David Gardner has positions in Amazon, Apple, Berkshire Hathaway, Copart, Costco Wholesale, Crocs, Netflix, Nike, Tesla, and Zoetis. Kirsten Guerra has positions in Axon Enterprise and Costco Wholesale. Mary Long has no position in any of the stocks mentioned. Sanmeet Deo has positions in Amazon, Axon Enterprise, Berkshire Hathaway, Crocs, Netflix, and Tesla. The Motley Fool has positions in and recommends Amazon, Apple, Axon Enterprise, Berkshire Hathaway, Copart, Costco Wholesale, Netflix, Nike, Nvidia, Pfizer, Tesla, and Zoetis. The Motley Fool recommends Crocs and Idexx Laboratories. The Motley Fool has a disclosure policy.

Rule Breaker Investing Stock Stories, Vol. 10: Frosty Campfire, Fiery Stocks was originally published by The Motley Fool