While the biggest companies are often likened to large ships that move in long sweeping paths rather than at sharp angles like smaller, more agile vessels, sometimes even the biggest battleships can advance with startling speed.
Screening among members of the S&P 500 for those that have moved with eyebrow-raising speed in a short amount of time turned up Netflix (NFLX -0.51%), Micron Technologies (MU -3.78%), and NVIDIA (NVDA 0.76%). These hulking giants were able to turn a $5,000 investment into almost $10,000 in just the last 12 months, proving you don't need to invest in risky penny stocks to see a decent return.
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Netflix (up 98.5%)
Sure, Netflix has been steadily rising over the past 12 months like that big battleship referenced above -- a long, sweeping arc of ever-greater investor confidence -- but when it reported second-quarter earnings a few weeks ago, it kicked its turbines into full throttle and surged forward.
The reasons for the power boost were that revenue jumped 32% in the period to $2.79 billion, and profits rocketed 60% higher to $66 million. More importantly, Netflix blew away subscriber-growth estimates, adding 5.2 million new members, which was significantly more than the 3.2 million it forecast. Much of the growth came from overseas, but that's expected because that's where much of Netflix's future expansion opportunities lay.
It also announced that it was getting into the movie business and its original content would air first on its site. That has the potential for completely upending Hollywood, which survives on its productions running first in theaters and then trickling down to streaming services. If Netflix is going to be giving consumers the kind of quality programming its original TV content has got them accustomed to, it could rewrite the entire script.
Netflix near doubling in value over the past year would have turned a $5,000 investment into one worth $9,925.
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Micron Technologies (up 113.1%)
Memory chipmaker Micron Technology has also been riding the wave higher for the better part of the year, as the market for computer memory products is booming. Micron has been able to capitalize on that as a result of a stronger DRAM pricing environment, a better product mix, and lower cost-per-bit in both DRAM and NAND; and a large part of that is because more smartphone manufacturers are adding more DRAM to their devices.
DRAM, or dynamic random access memory, is what is typically used for data or program code that a computer processor needs to function. While most people are familiar with it in their personal computer, smartphones are increasingly turning to it as well. In its second-quarter earnings conference call with analysts, Micron CEO Sanjay Mehrotra said "it really continues to increase nicely going in value smartphones from about a little over a gigabyte per phone to about doubling by the 2018 time frame," with the same happening at the high end.
Those kinds of trends helped lift Micron Technologies stock from under $14 a share a year ago to over $29 today, a 113% increase good for turning $5,000 into $10,600 today.
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NVIDIA (up 188.5%)
Likely no one is surprised that chipmaker NVIDIA tops the charts, though for decidedly different reasons than Micron ranked highly. NVIDIA's graphics chips have been all the rage for so long now that the company has been a powerhouse investment almost since its IPO, and its stock has returned more than 13,500% since then.
Although the stock has been growing at a torrid pace, 2017 was something of a respite and shares mostly traded sideways this year until, like Netflix, it decided to turn on the afterburners after reporting positive earnings.
Sure, the gaming business continues to provide the foundation upon which NVIDIA is built, but it's the expansion into ancillary industries that excites investors the most. Its first-quarter financial report showed the potential for data centers and automobiles, with the former seeing a 186% gain in revenue and the latter jumping 24%. Sure these are still nascent businesses for the chipmaker, generating revenue of only $409 million and $140 million, respectively -- a drop in the bucket really for a company that generated over $1.9 billion for the quarter -- but it's the possibility of how much those investments can grow over time that rallied investors.
And speaking of how much an investment can grow, $5,000 placed into NVIDIA stock in July 2016 would be worth over $14,400 one year later. Now the chipmaker does carry a premium valuation at this level, but it could be that, as the industry leader, it is worth every penny.
