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Why some of our 'best company' picks didn't stay that way

Our Company of the Year isn’t necessarily the company of the decade.

Costco (COST) is the 11th annual Yahoo Finance Company of the Year (COTY). And a deserving one. But a look back at the list of prior winners contains a sobering lesson: greatness doesn’t always last.

Our first COTY selection, for example, was Gap (GPS), in 2012. Believe it or not, the denim retailer was enjoying a resurgence back then, with the stock surging from 2011 to 2014. Since then, however, Gap has become the poster child for the old-school retail apocalypse, closing hundreds of stores, churning through CEOs and even inking a regrettable deal with one of the incarnations of Kanye West. Since peaking in 2014, the shares are down nearly 70%.

Another stumbler, our 2013 selection, Disney (DIS), is still a blue-chip firm. But it hit a rough patch under the leadership of now-departed CEO Bob Chapek. His predecessor, Bob Iger, is now at the helm once more, and he has a lot of fixing to do. Profits are well below pre-Covid levels and the stock is down 35% this year, more than twice the drop in the S&P 500 stock index.

Then there's former high rider Under Armour (UA). It seemed poised to become the next Nike when it claimed the 2014 best-company title. But it missed the athleisure trend, lost high-profile endorsers and endured management problems. The company's value, meanwhile, has dropped from a peak of $22 billion in 2015 to less than $4 billion today.

Another disappointment: Facebook (META), our 2015 winner. In 2021, Yahoo Finance readers face-palmed the company, now Meta, by voting it worst company of the year. What irked investors then was a stream of controversy over Facebook allowing bogus content on the site and/or blocking certain political points of view. This year’s woes include a wrong turn into the “metaverse,” where nobody except CEO Mark Zuckerberg wants to hang out. The company laid off 11,000 workers in November, and the stock is down 67% from its 2021 peak. Once a rare trillion-dollar company, Meta is now worth less than $300 billion.

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Other Company of the Year setbacks?

Square (SQ), our 2018 winner, began to focus on cryptocurrency a couple years later, eventually changing its name to Block—as in blockchain. From 2020 to 2021, Square/Block rode the crypto boom up. Then, this year, it rode the crypto bust right back down. Shares soared in 2021, then plunged in 2022, and they’re now around where they were before the move into crypto. Block is back to Square 1.

And when we picked Zoom (ZOOM) in 2020, we wondered whether the "meme" darling of the COVID lockdown era would maintain its momentum once COVID faded and people went back to work. Turns out, not. Zoom had an epic year in 2020, with the stock up nearly 400%. Since then, however, it’s down 87%%. Zoom out.

Some COTY winners, though, are as influential as they were when we chose them, or more so.

Nvidia (2016) is now one of the nation’s foundational tech companies, with microchips that power everything from video games to artificial intelligence. Amazon (AMZN), the winner in 2017, is still the dominant online retailer, though others are catching up—including Target (TGT), our 2019 winner. Microsoft (MSFT), our 2021 winner, has fallen back to earth like most tech companies this year, yet it powers ahead with a suite of terrific franchises.

Preordained greatness is not one of our criteria for selecting the Company of the Year, so we don’t mind if some of our choices lose their luster after their moment of glory. We like companies that had rewarded investors—or, as with Costco this year, punish them less than the market as a whole. We also look for companies that capture the zeitgeist, as Costco did this year by helping consumers battle inflation. And we do, of course, hope our choices remain buzzy so we can check in on them in 10 or 20 years. Costco seems likely to meet that requirement.

More Yahoo Finance Company of the Year 2022 coverage:

Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman

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