Although there is some truth in the saying that it takes money to make money, that doesn't mean investors can't start small and reap big rewards. With little more than $1,000 in your account, you can turn what seems to be a tiny grubstake into a weighty retirement nest egg.
Let's look at three stocks that turned a $1,000 investment into at least $2,000 and as much as $4,100 in one year. According to Morningstar, RH (NYSE:RH), Vivant Solar (NYSE:VSLR), and Calithera Biosciences (NASDAQ:CALA) had total returns in the past year that would have at least doubled an investor's money. But that doesn't mean you should invest blindly in these stocks, or any for that matter, as sometimes the markets can be wrong.
Vivant Solar (one-year total return: 101.7%)
Residential solar power is coming back strong, and Vivant Solar is ready tor the resurgence, if its scorching hot returns in the past month are any indication.
Vivant itself was burned last year by a botched merger with SunEdison, which tried to buy out the solar company in a $1.9 billion cash-and-stock deal, but its yieldcos couldn't sustain the valuations they were supposed to and the whole enterprise collapsed, taking the merger down with it. (SunEdison was subsequently acquired itself.) Add in the changing nature of the residential solar market, which is transitioning from lease and power purchases to system sales as costs fall, and it is a tumultuous time.
But Vivant is moving with the industry, and a Goldman Sachs analyst sees it as a good buyout candidate still. Though there are no known deals at the moment, that's what accounts for the doubling in value of Vivant's stock in just the past month, putting its total return at just over 100% for the year and making a $1,000 investment worth slightly more than $2,000.
RH (one-year total return: 116.9%)
Home furnishings retailer RH, which until the end of last year was known as Restoration Hardware, has been riding the home furnishings retail wave that has seen the proliferation of stores from At Home and Bed Bath & Beyond to TJX Companies' HomeGoods chain -- and even J.C. Penney, which re-entered the market after a 30-year absence.
What they have in common is that furniture sales tend to be Amazon.com-resistant (though not Amazon-proof), because people largely want to see, feel, and test out chairs and case goods before buying. Even so, Wayfair has shown it is possible to successfully sell furniture and accessories online.
What RH is doing is taking it upscale and creating a conglomerate of sorts for interior decorating, with concepts ranging from RH Modern, RH Baby & Child, and RH Teen to RH Contemporary Art galleries and RH Atelier, a clothing-store chain. Many of these seem more akin to vanity projects for its CEO than sustainable businesses.
However, after reporting disappointing first-quarter earnings that saw its shares tumble 26%, the company has watched its stock roar back, climbing 53% in just the past month. Its total return for the past year is 117%, which would have made a $1,000 investment worth more than $2,100. But careful: RH's three-year total return is negative-10%, meaning it's destroyed value, and this furnishings retailer may yet resume its failing ways.
Calithera Biosciences (one-year total return: 313.4%)
The biggest mover of the three, Calatheira Biosciences also had the most tangible benefits to at least somewhat justify the gains it's enjoying. Earlier this year, the biotech announced a partnership with Incyte (NASDAQ:INCY) to develop its arginase inhibitor CB-1158, a novel therapy to inhibit tumor growth in patients with renal cell cancer, breast cancer, non-small-cell lung cancer, acute myeloid leukemia, and more. Incyte paid Calithera $45 million up front and agreed to buy $8 million worth of Calithera stock at $4.65 per share.
A few months later, it announced it was expanding its work with Bristol-Myers Squibb (NYSE:BMY) in using Calithera's CB-839 in combination with Bristol's Opdivo to treat non-small-cell lung cancer and melanoma.
Those kinds of partnerships have helped Calithera Biosciences nearly quadruple in value in just six months and sport a total return over the past year of more than 313%, which would turn $1,000 into $4,100 in 12 months' time.
Slow and steady wins the race
While these stocks have shown investors it's possible to make large gains in short order, it's also apparent that oftentimes big wins are built on shifting sands. That's why it's never prudent to try to bet big or swing for the fences hoping for a home run. If they come your way, fine, but don't go looking for them. Taking your small grubstake and slowly building it into an enviable nest egg is the best course of action.