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  On your list are probably the usual Internet heroes, like eBay (EBAY:Nasdaq - news - research - Cramer’s Take), and maybe a

biotech, like MedImmune (MEDI:Nasdaq - news - research - Cramer’s Take) or a fast-growing store, like Starbucks (SBUX:Nasdaq

- news - research - Cramer’s Take).

  But boy, oh boy, would you have been wrong. The leading stock over the past six years, according to my calculations, makes just about the least exotic product you can imagine: soda pop. It’s Hansen Natural (HANS:Nasdaq - news - research - Cramer’s Take), which is up 3,739% since Jan. 1, 2000. And the next four best aren’t exactly household names, either. They are:

KCS Energy (KCS:NYSE - news - research - Cramer’s Take), a Houston-based natural gas producer, +3,251%.

IRIS International (IRIS:Nasdaq - news - research - Cramer’s Take), a maker of automated urinalysis systems, +3,248%.

Amedisys (AMED:Nasdaq - news - research - Cramer’s Take), a home nursing care provider, +3,181%.

Quicksilver Resources (KWK:NYSE - news - research - Cramer’s Take), a Texas-based natural gas producer, +2,929%.

  The incredible success of these unassuming businesses provides investors with valuable insights into the character of our age and what makes stocks go up.

  It’s obviously not glamorous-CEOs, hyped-up, investor-relations campaigns or sexy products, although none of those things will actually hurt. It’s mainly about finding an underappreciated niche that’s small enough to be ignored by much larger players — and then developing a pipeline of products that can be sold for many years at relatively high margins to an increasing number of customers. All of these market-leading companies crush their peers on returns on capital and pricing power — business fundamentals that allow them to continually grow into valuations that seem perpetually cheap.

  After the Run-up, Still Cheap

  Did I say cheap? That’s right. Even though these five super outfits have walloped the market in the past six years — the S&P  500 is down 12% during that stretch, while the Nasdaq is down 35% — they are still relatively inexpensive because they continue to boost earnings faster than analysts can update their estimates.

Consider KCS Energy. The natural gas driller and developer is expected to earn $3.24 per share in 2006, up 47% from 2005. Yet its forward price-earnings multiple is just 8.4, which is about six times lower than it would be if investors really believed that kind of growth would materialize as expected.

Or how about Hansen Natural? It is expected to earn $2.97 per share in 2006, or 30% more than in 2005. And yet its price/earnings multiple on that estimate is just 27. To give you an idea of how out of whack that is, consider that Coca-Cola (KO:NYSE - news - research - Cramer’s Take) is expected to grow 7% next year, yet its price/earnings multiple is more than double its growth rate, at 18. If Coca-Cola were valued like Hansen, in other words, it would be at around $21.50 instead of $43.

Beating Low Expectations

  The market continues to underestimate these smaller companies in part because investors tend to disbelieve high-growth stories in non-glamorous industries. When expectations are relatively low, exceptional companies can easily beat them. And it’s that disconnect between expectation and reality that drives prices higher. As the expectation gap slowly closes, more and more investors decide to take large positions in the stock. And as they grow more and more comfortable with the story, they give the company higher price/earnings multiples.

Ultimately, the process ends with expectations and performance narrowing into line, and the stock’s advance slows down to a more normal pace. A stock can still be terrific at that point because of its underlying strength, but it will cease to be a super-stock capable of leaping decades in a single bound. Look at Expeditors International of Washington (EXPD:Nasdaq - news - research - Cramer’s Take), the outstanding but low-glamour freight logistics company. Its shares gained 1,400% from 1990 to 2000, then slowed down to put up a terrific, yet not world-beating, 240% gain from 2000 to now.

  To put these numbers into some perspective, consider that current darling Apple Computer (AAPL:Nasdaq - news - research - Cramer’s Take) is up just 183% in the past six years, while eBay is up 198%. Much fuss has been made over Google (GOOG:Nasdaq - news - research - Cramer’s Take), yet despite its $415 price tag, it’s only up 280% since going public — and expectations are so high that it’s unlikely to achieve stock-of-the-decade status.

Energy, Health Care Lead the List

As you can see below, the list of the top 15 stocks of the first half of the decade has tilted toward energy and health care.

 Quicksilver, XTO Energy (XTO:NYSE - news - research - Cramer’s Take), Cheniere Energy (LNG:NYSE - news - research - Cramer’s

 Take) and Holly (HOC:NYSE - news - research - Cramer’s Take) join KCS in the oil-and-gas group. Nurse-staffing provider

Amedisys (AMED:Nasdaq - news - research - Cramer’s Take) and hospital information-technology provider Quality Systems

(QSII:Nasdaq - news - research - Cramer’s Take) join IRIS and American Healthways (AMHC:Nasdaq - news - research - Cramer’s

Take) in medical-services providers.

The rest of the bunch is pretty eclectic: diametrically different retailers Tractor Supply (TSCO:Nasdaq - news - research -

Cramer’s Take) and women’s apparel specialist Chico’s FAS (CHS:NYSE - news - research - Cramer’s Take), along with airframe

maker Titanium Metals (TIE:NYSE - news - research - Cramer’s Take), ceramic-armor maker Ceradyne (CRDN:Nasdaq - news -

research - Cramer’s Take) and Polish liquor distributor Central European Distribution (CEDC:Nasdaq - news - research -

Cramer’s Take).

15 best stocks of the decade

Company 1/2/2000 12/2/2005 Market cap 6-yr pct chg.

Hansen Natural (HANS, news, msgs) $2.16 $82.76 $1.8 billion 3,739%

KCS Energy (KCS, news, msgs) 0.81 27.24 1.3 billion 3,251

IRIS International (IRIS, news, msgs) 0.75 25.11 428 million 3,248

Amedisys (AMED, news, msgs) 1.38 45.11 712 million 3,181

Quicksilver (KWK, news, msgs) 1.33 40.29 3.06 billion 2,929

American Healthways (AMHC, news, msgs) 1.58 45.92 1.5 billion 2,801

Cheniere Energy (LNG, news, msgs) 1.38 39.13 2.1 billion 2,746

Chico’s FAS (CHS, news, msgs) 1.80 44.40 8.02 billion 2,367

XTO Energy (XTO, news, msgs) 1.75 43.10 15.6 billion 2,363

Palomar Medical Technologies (PMTI, news, msgs) 1.50 34.87 592 million 2,225

Quality Systems (QSII, news, msgs) 3.75 84.08 1.1 billion 2,142

Ceradyne (CRDN, news, msgs) 2.06 44.05 1.08 billion 2,038

Central European Distribution (CEDC, news, msgs) 2.22 43.09 877 million 1,841

Holly (HOC, news, msgs) 3.40 62.96 1.8 billion 1,752

Tractor Supply (TSCO, news, msgs) 3.96 55.15 2.17 billion 1,293

Titanium Metals (TIE, news, msgs) 5.00 64.15 2.06 billion 1,183

Now you can probably guess that I’m going to tell you that despite their big runs, all of these stocks look pretty good.

And I won’t disappoint you. They do. Strangely enough, none of them appears to be overpriced in relation to earnings or

margin growth, unless you think that the price of oil is headed back under $40 in the next year. The ones that look best,

however, from a fundamental and technical point of view, are Quicksilver and XTO — which have consolidated within their

uptrends lately — as well as Central European and Tractor.

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