In a rising market, it's easy for the tide to lift all boats, but it takes a special company and business to far outperform all others. When one stock can soar much further than its rivals, that's a business that investors might want to look at more closely.
MGP Ingredients (NASDAQ:MGPI), Acadia Pharmaceuticals (NASDAQ:ACAD), and Netflix (NASDAQ:NFLX) are three such companies that did just that, taking a grubstake investment of $8,000 and in just five years time turning it into a colossal $135,000 return.
MGP Ingredients (76.88% annual return for $138,511)
It's probably not so far afield to partially credit the TV show Mad Men for the current popularity of whiskey, bourbon, scotch, and rye, and distilling giants such as Diageo have ridden the wave higher. In its fiscal 2017 fourth-quarter earnings announcement, the company reported 15% rise in net sales, driven in large part by strong growth in North American whiskey, scotch, and tequila sales. In particular, whiskey sales surged 12% on the strength of its Crown Royal and premium Bulleit brands.
What many investors may not know is that Diageo and a number of other distillers source their alcohol from MGP Ingredients, a contract distiller in Indiana, which produces high-quality formulations that customers can tweak to their own specifications. Premium whiskey Bulleit is but one brand that gets its start at MGP. Many so-called craft distilleries are also using MGP for their alcohol, which seems to belie the "craft" image they're trying to maintain.
Business in the premium alcohol market has been good for the contract distiller, with sales rising 14.5% last year, though total sales were dragged down by declines in industrial alcohol, which is used in food and non-food applications.
Whiskey's popularity has driven an investment in MGP Ingredients higher, with total returns of some 1,650% over the past five years. That would have turned an $8,000 investment into one worth more than $138,500. I'll drink to that!
Acadia Pharmaceuticals (77.22%, $139,847)
The ride for commercial-stage biopharma Acadia Pharmaceuticals to outsize performance hasn't been a smooth one, as you'd expect for a biotech that is operating in the rough-and-tumble world of new drug discovery. But with FDA approval last year of its Parkinson's disease psychosis (PDP) drug Nuplazid, Acadia looks as if it might not be looking backward for a long, long time.
The benefit to Acadia from Nuplazid is that there are really no other treatment options on the market for patients suffering from the illness. With approximately a million patients in the U.S. currently suffering from Parkinson's -- a progressive condition of the central nervous system that causes tremors, muscular rigidity, and imprecise movement -- it has a large pool of patients to target as many go on to develop PDP. Its second-quarter earnings report shows how large the potential is, as Acadia reported sales growth of more than $30 million for Nuplazid, far ahead of the $19 million analysts were expecting.
With the possibility the drug could be used for other conditions as well, there doesn't seem to be any reason Acadia can't continue to perform beyond the reaches of the rest of the market. The nearly $140,000 that $8,000 initial investment has turned into may very well be worth a lot more in the years ahead.
Netflix (77.85%, $142,350)
You can probably track Netflix's growth as an investment with the growth in the number of subscribers it has to its service. While there are over 103 million subscribers worldwide right now, with about half in the U.S. alone, five years ago it had only about 26 million.
In its second-quarter earnings report, issued a few weeks ago, Netflix said revenue jumped 32% for the period to $2.8 billion, while profits were soaring 60% higher to $66 million. Of more importance, the movie-streaming service blew away subscriber-growth estimates, adding 5.2 million new members, which was well ahead of the 3.2 million it had forecast. While the bulk of the subscriber growth numbers came from overseas, that's not surprising, because that's where Netflix's future lies -- there, and in original content.
Once upon a time, Netflix was content to rent out other people's movies, but the success of its House of Cards and Orange Is the New Black original series taught it that relying on the kindness of others is second best. Now Netflix is a full-blown content creator, and it's looking to upend how Hollywood works by releasing feature-length movies on its platform rather than in theaters.
With a nearly 80% annual return for the past half-decade, Netflix has been a rocket ship on fire that shows no signs of burning out. An $8,000 investment in the movie-streaming service back in 2012 would be worth $142,350 today, a not-too-shabby result for kicking back with your feet up and eating some popcorn while you watch a few movies.