3 Comeback Stocks of 2013

Movies aside, you don't see underdog comebacks too often. But the stock market is another story. There are easily dozens of public companies -- even widely followed ones -- that investors give up on each year, only to see them come surging back.

In December I highlighted three such stocks from 2012Green Mountain Coffee Roasters, Facebook, and GameStop (NYSE: GME  ) . Each had sent shareholders running for the exits at some point in the year, but finished with gains of more than 60%. That run has kept up into 2013 for two of the three. While Facebook is running even, Green Mountain and GameStop are up by more than 70%.

This year is only half done, but the stock swings are already piling up. Here are three of the biggest comebacks so far.

Streaming back
Netflix (NASDAQ: NFLX  ) started the year at less than $100 a share. That was before it announced a huge fourth quarter that sent the stock soaring toward a 200% return over the last 52 weeks. Despite worries about rising content spending and a new debt offering's potential as a "red flag," Netflix hasn't looked back.

That's mainly thanks to the streamer's successful gamble on original content, which is making it easier to gain new subscribers and to keep the existing ones. Netflix has approved second seasons of almost all of its exclusive shows, putting it well ahead of Amazon.com's Prime streaming service, which won't introduce its first batch of original programming until later this year.

Charging ahead
Tesla Motors (NASDAQ: TSLA  ) has had plenty of detractors this year. It started 2013 as one of the most shorted stocks on the market, with 53% of its float representing bearish bets.

But since early January the stock is up better than 200%. Tesla notched some big wins lately, including reaching companywide profitability, ramping up production of its Model S, and seeing that car receive Consumer Reports' highest review rating. But is that enough to justify a huge premium over other carmakers? Not according to many investors, as Tesla is still among the most hated stocks in the market, with 26% of the float sold short.

Trading up
GameStop's wild ride has earned it another spot on the list. The video game retailer's shares hit a 2013 low in January, at $23, while its industry continued to shrink. Then, after surging to touch $40 on optimism over new game consoles, the stock tanked over fears that those devices would destroy the market for used video games. Now it's back near a five-year high.

GameStop can thank Microsoft for a lot of that volatility. The tech giant rolled out its Xbox One console in June. And despite huge warning signs, the system specs included a restrictive digital rights management system that didn't sit well with gamers. Microsoft has since responded to the complaints and removed those restrictions, leaving GameStop's lucrative trade-in and resale business intact.

Foolish bottom line
Each of these companies could see investor sentiment turn sharply negative again. The stakes are particularly high as they report second-quarter earnings in the coming weeks. However, GameStop, Tesla, and Netflix are sitting on huge year-to-date returns, and that was difficult to imagine just a few months ago.

We're always on the lookout for stocks with potential for breakout runs like these. The Motley Fool's chief investment officer has selected his No. 1 stock for this year. Find out which stock it is in the special free report "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.


Read/Post Comments (5) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 17, 2013, at 2:25 PM, AlaaSadek wrote:

    Does anyone know what Elon meant by saying that they will make all kinds of cars in Teslive. Could that be a hint for making vehicles for the army? It sounds right. If the army uses these old ICE that are much slower than these electric cars then it is at a disadvantage! I feel that Tesla could have a LARGE contract with the army soon, or better said I feel that it SHOULD.

    Just imagine a tank that is quicker than a motorcycle!\

  • Report this Comment On July 17, 2013, at 5:06 PM, Angela0304 wrote:

    NFLX is my favorite stock. After SA recommendation in '07, It was my first 10+ bagger (in my retirement account.) It's never been off the recommendation list, but I put a stop order on it in spring of 2011 and stopped out near the peak. I have now accumulated another 13X my original investment, riding strangles/straddles down to 65 and back up to where we were 2 years ago. What a ride it's been. It's not often that a person can say they paid their mortgage with a single stock. And honestly, that one recommendation has paid for my TMF subscriptions for life.

  • Report this Comment On July 17, 2013, at 6:01 PM, TMFSigma wrote:

    Congrats @Angela! I can't think of many stocks that have bounced from $15 billion in market cap to below $5 billion and then back to 15 in just 2 years.

    But a huge advantage of being a long-term investor like yourself is that you don't need to fret (and can even profit from) those crazy swings so long as you're confident in the business.

    -Demitrios

  • Report this Comment On July 18, 2013, at 2:50 PM, DCUDFlyer wrote:

    Angela0304 -

    First off, congrats! Second, curious as to your thought process during the "ride." Are you a big believer in Hastings? Did you stick with it as a result of some fundamental analysis? "Set it and forget it" stock in your retirement account?

    Not many investors had the stomach to ride it out as you did....perks of being a long term invester as TMFSigma pointed out!

  • Report this Comment On September 04, 2013, at 6:40 PM, Angela0304 wrote:

    Just thought of this again today. NFLX came within 4% of its record high. I currently have several options positions and I'm going to have to make a decision regarding sales of my Jan 14 calls pretty soon.

    DCUDFlyer: It's been quite a ride, up and down. I sold off the NFLX in my IRA a couple of years ago. Once I have a stock that has made back twice my money, I tend to protect those profits with a rolling stop order. Of course, the "flash crashes" over the last couple of years really make me re-think those orders.

    For the most part, I don't trade frequently in my IRAs. My Dad worked for a single company for almost 50 years, and funded his retirement with company bought stock. Even though he lost 35 or 40% of his net worth on Black Monday 1987, he retired 3 years later with $ to fund a comfortable retirement. My Mom is still quite comfortable thanks to their modest savings all those years. My mother-in-law was not so fortunate, and having to contribute to her retirement for many years made me appreciate my own financially stable parents that much more.

    Dad's retirement accounts led me to maximize my 401K withholding & SEP contributions for many years. My holdings are quite a bit more diverse than his were during his career, but observing his slow and steady investment was a great life lesson. Wow. A little TMI.

    On the same topic, just saw TMFHousel's excellent "Open Letter" article. Such important reading for all young adults. About to forward it to my sons, nieces, and nephews.

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