The stock market has performed very well so far in 2017, and the Dow Jones Industrials and other major market benchmarks have set record highs on dozens of occasions throughout the year. Yet the gains in the broader markets pale in comparison to what some individual stocks have managed to make for their shareholders.
Align Technology (ALGN 0.63%), Square (SQ +1.29%), and Ferrari (RACE +3.90%) have doubled year to date, and many believe that their future prospects are at least as good as what has caused them to do so well in the past.
ALGN Total Return Price data by YCharts.
Align straightens things out
Align Technology has done an amazing job of rewarding its investors, posting returns of more than 150% so far this year. The maker of the Invisalign orthodontic mouthpiece has seen unprecedented success for its products, tapping into growing markets in many different ways. Within the core U.S. market, Align has done an exceptional job of going beyond its initial niche of serving appearance-conscious adult customers and moving more deeply into the much larger teen market. In addition, Align has made moves to expand internationally, seeking to increase its addressable audience many times over.
Align has high hopes for the immediate future as well. The company is looking to go beyond basic orthodontic needs to treat more serious dental problems, again with the goal of serving as broad a patient base as possible. Despite its progress, Align's market penetration rates still leave the company room for further success, and shareholders have reasonable hopes for further gains in the near future.
Invisalign system. Image source: Align Technology.
Square taps into e-commerce
One of the most difficult things that new businesses have to deal with is figuring out how to get paid. In the past, getting access to credit card merchant accounts was costly and time-consuming, but Square has made it much easier for even the smallest businesses to be able to accept credit and debit cards as payment. Moreover, Square has worked hard to expand its lineup of services, figuring correctly that once it gets its foot in the door to help its clients on the payment side, broadening the relationship to include accounting, payroll, and small business loans is a natural step.
Square has led this group of stocks higher with gains of more than 170%, and many see a lot more room for improvement from the company. Square isn't yet making money, but it's starting to approach the breakeven point, and the growing need for its services from a flood of new entrepreneurs rushing into the lucrative e-commerce business should help give Square the opportunities it needs to continue to expand and improve its financial picture.
Ferrari hits the gas
Finally, Ferrari just barely limps across the finish line onto this list with a total return of 101%. The maker of high-end vehicles has seen impressive profit growth during the year, and sales of its high-powered cars have been particularly strong. Low energy prices have made gasoline more affordable in many parts of the world, and that has helped drive demand for more powerful vehicles. The automaker issued strong guidance for the year even as it has made steps to cut its net debt and improve the strength of its balance sheet.
Many people have been concerned that the healthy U.S. auto market could be hitting a cyclical peak, and that has had mixed impacts on larger domestic automakers. For Ferrari, though, the luxury market plays by different rules, and investors are rightfully optimistic about its ability to keep thriving even if more mainstream plays in the industry struggle.
Keep your eyes on the prize
Just because a stock doubles doesn't mean that there are further gains in store, and investors have to look at these stocks from a fresh perspective. Nevertheless, Ferrari, Square, and Align Technology all have good things going for them, and their prospects still look favorable even after their impressive runs higher.
