Each year, you can find stocks that manage to produce exceptional returns. Yet you won't find more than a handful of stocks that have quadrupled their investors' money in just a single 12-month span. That's exactly what Chemours (CC -1.59%), Everi Holdings (EVRI -2.74%), and Northern Dynasty Minerals (NAK 0.78%) have done, and curious investors want to know if further gains are in store for these companies. By seeing how they got where they are today, you can get a better sense of where they might be headed.
Chemours makes a strong comeback
Some businesses are by their nature volatile, but few companies are designed deliberately to make them more susceptible to volatility. For chemical company Chemours, the way that DuPont (DD) spun off the business left the spinoff with large amounts of debt and contingent liabilities, which led Chemours stock to lose more than 80% of its value during the first six months after its formation, before bouncing back during 2016. Those gains have continued during 2017, as Chemours has benefited from settlements in connection with a class action lawsuit over the chemical PFOA.
More broadly, the market for the paint pigment titanium dioxide has rebounded sharply, and that has helped lift manufacturer Chemours along with it. That said, there's still a lot of potential liability out there, and one adverse event on that front could quickly undo all the progress that Chemours has made over the past couple of years. In the meantime, if industry conditions remain favorable, then gains are still possible -- albeit likely at a slower rate than in the past.
Image source: Chemours.
Everi wins out
Everi Holdings works closely with the casino industry, providing a couple of key services for gaming companies. The company's Everi Games unit works on video and mechanical games for a wide variety of casinos, including both those located on Native American lands and those operated by private commercial gaming companies. Everi also has a payments division that helps handle needs for payment solutions associated with casino gambling, including providing ATMs for patrons.
Everi has also faced challenges related to debt, but recent efforts to get its balance sheet healthier look like they're paying off. Recently, the company said that it would find ways to refinance a portion of its outstanding debt, and investors cheered the possibility that Everi could cut its high levels of annual interest expense. As interest rates look poised to rise, it will be increasingly important for Everi to get its debt under maximum control, while still offering the leverage that could result in strong share-price gains.
Northern Dynasty moves ahead
Finally, Northern Dynasty Minerals has been the best performer of these three stocks, climbing more than 400%. The small mining company has seen a lot of volatility along the way, largely because its Pebble Project asset in Alaska is still in the development phase and is subject to various regulatory-review processes. That has led to both good and bad news, and rises and falls in the share price have inevitably followed.
Most recently, favorable news has included the Alaska Department of Natural Resources' issuance of a land-use permit for the company to operate, and a stay of proceedings with the U.S. Environmental Protection Agency. Yet big declines have come as well, including one that came as investors realized that Northern Dynasty will have to obtain an environmental impact statement from the U.S. Army Corps of Engineers within the next four years. Investors need to be prepared for more volatility from the stock, and future performance might not be as good as what shareholders have seen over the past year.
Even the most successful stocks usually take years to quadruple in value, so when you see one do so in just 12 months, it's smart to be skeptical. By understanding the stories behind these stocks, you'll be better able to decide whether any of them belong among the positions in your investment portfolio.
