Although biotechnology stocks in general have a reputation for offering some of the best potential for high returns, they also come with substantial risk. In fact, investors can actually find big winners in any industry, even in the sectors that are considered the most mundane.
Electronic Arts (NASDAQ:EA), U.S. Concrete (NASDAQ:USCR), and Lending Tree (NASDAQ:TREE) may not be the most exciting names (OK, EA's various e-sport video game franchises are a pretty thrilling diversion), but they do show that investors can find superior returns anywhere.
Electronic Arts (up 823%)
Electronic Arts has perfectly positioned itself to capitalize on the public's growing appetite for esports: Its Madden NFL and FIFA Soccer are among the most popular titles in the genre.
My colleague Joe Tenebruso recently highlighted the tremendous growth the esports segment is expected to enjoy over the next few years; the forecast is that the worldwide audience will grow from 323 million people in 2016 to over 589 million by 2020.
Equally important, Electronic Arts struck deals with YouTube, Twitch, and Facebook to expand coverage of esports events. While I may not quite understand the excitement of watching someone else play a video game, hundreds of millions of people around the world do. And it can't be disputed that a guy who plays video games on YouTube -- PewDiePie -- is also the platform's highest grossing video producer. He has over 57 million subscribers with an estimated $15 million in annual income -- just from playing video games on YouTube.
In its fiscal 2018 first-quarter earnings report, EA said digital net sales for the period, which ended June 30, were $879 million, up 27%, and had grown to $3.1 billion over the last 12 months, a 33% increase. This all underscores why a $10,000 investment in Electronic Arts five years ago would be worth over $82,000 today.
U.S. Concrete (up 1,060%)
Watching concrete dry might be only slightly more exciting than watching paint dry, if only because you have to get your job finished before it sets, but U.S. Concrete has transformed a humdrum business into a huge growth engine.
The ready-mix concrete maker's sales soared 24% in the second quarter as it parlayed a building boom in major metropolitan areas into a stronger position in its segment. Seemingly willing to go into areas others would rather avoid, U.S. Concrete took on projects in high-growth urban areas where there was neither external stimulus nor local government funding.
An overall healthier economy has helped lift the concrete-maker's results. The Architectural Billing Index is at its highest point in three years, and the U.S. economy produced GDP growth of 2.6% last quarter as personal spending, nonresidential investment, and government spending all rose. Those are favorable tailwinds for U.S. Concrete, which says it plans to continues its growth-by-acquisition strategy.
Pouring concrete may be dull, but the $106,000 gain an investor would have realized from putting on a $10,000 pair of cement shoes in 2012 is pretty exciting.
Lending Tree (up 1,570%)
It would seem that some of the same favorable trends pushing U.S. Concrete higher lifted Lending Tree too, but the online loan platform surpassed it in performance as more people took advantage of the ease and access of its loan shopping site.
Though it's best known for pairing homebuyers with mortgage lenders, that business accounts for less half of Lending Tree's revenues. And while that segment is up 28% year to date compared to a 4% drop in overall loan originations, its the non-mortgage business that is producing the truly stellar gains. Personal loans, credit cards, and home equity lines of credit doubled in the same time frame.
According to a recent Fortune article, Lending Tree is the third-fastest growing company this year, and its stock has delivered 47% compounded annual rates of return for investors since going public in 2008. In just the last five years, its stock has risen 1,550%, meaning a $10,000 position opened in 2012 would be worth $157,000 in 2017. Because Lending Tree has diversified streams of revenue, it's possible that even in a rising interest rate environment, this company could still make significant gains in the future.