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3 Most Improved Stocks of 2012

Demitrios Kalogeropoulos
December 12, 2012

With the year almost over, it's a good time to look back at 2012's biggest winners and losers. Sitting on a 135% gain, Sprint is leading the market in year-to-date returns. On the other side of the S&P 500 scorecard we have the for-profit educator Apollo Group, which is staring at a painful 62% loss on the year.

But today, I'm looking at three stocks that were both big losers and huge winners on the year. They began with massive losses but managed to close out on a strong note and are candidates for 2012's most improved stocks.

Moderating growth
Green Mountain Coffee Roasters (NASDAQ: GMCR) is one good example. The company had a bitter first half of the year. Its manic growth story hit the skids starting in the second quarter, when it reported a lower-than-expected jump in sales. Green Mountain blamed unseasonably warm weather as a likely culprit, but it also warned of "moderated growth" looking forward. And the company's third-quarter results were more of the same, with CEO Lawrence J. Blanford admitting that Green Mountain was transitioning "from hyper-growth to a level more in-line with other successful growth businesses." Competition started entering the K-Cup home brewing market, including from Starbucks (NASDAQ: SBUX). The coffee powerhouse sees its Verismo home brewing machine as its ticket into an $8 billion market opportunity. Under these pressures, Green Mountain's stock hit a low near $17 in late July. Shares were trading at just 10 times trailing earnings, quite an adjustment from the P/E of 80 that the company enjoyed last year.

But since those dark days, Green Mountain's shares have had a great run, up by more than 120% in five months. The company has been having no trouble beating those sharply lowered expectations. It trounced earnings estimates last quarter, booking a 23% rise in profit on a 33% jump in revenue. And Green Mountain's shares aren't valued at the fire-sale prices we saw this summer. They now trade at 17 times earnings.

Playing games
Video game retailer GameStop (NYSE: GME) had a roller coaster of a year, too. The company looked like a lost cause for much of 2012. With gamer dollars flocking to online games and apps, the company's entire business model looked out of place. Declining video game sales fed into stagnating console sales as the company reported its sixth straight quarter of falling comparable sales in the second quarter. Shares hit a low near $15 in early August.

Yet the stock is up more than 75% since then, and the specialty