We're just a month into this year, but there are already dozens of stocks that are more than halfway to doubling in 2020. Himax Technologies (HIMX 1.86%), Tesla Motors (TSLA +2.96%), and SmileDirectClub (SDC +0.00%) are among the stocks that have already served up blistering returns in January.
They are in entirely different industries with entirely different paths to market-thumping returns. Let's see what's fueling the big gains at Himax, Tesla, and SmileDirectClub so far this year.
A Tesla Model X. Image source: Tesla Motors.
Himax Technologies: Up 50%
The designer of display-driver chips and other semiconductor products has been moving higher since posting better-than-expected preliminary financial results during the first week of the year. Final results won't be announced until next week, but Himax did reveal that it generated $174.9 million in revenue in the final three months of 2019. This is a far cry from the $191 million that it delivered a year earlier, but it's a relative success.
Back in November, Himax's guidance was calling for the fourth quarter's top line to clock in flat with the $164.3 million that it had just delivered in the third quarter. A year-over-year decline is never a good look, but this represents a nearly 7% sequential advance. Himax has had its ups and downs. Chip stocks can be volatile, and swings are par for the course. An increase in annual revenue has been followed by a decline every year since 2014.
Another shot of good news came last week when Lake Street analyst Jaeson Schmidt upgraded the stock from hold to buy, doubling his price target to $5 in the process. The fourth quarter's sequential improvement in both revenue and gross margin finds him eyeing a year of double-digit growth in 2020.
Tesla Motors: Up 56%
The electric car maker has seen its own stock charge higher in 2020, and a better-than-expected quarterly report last week helped keep Tesla driving in the right direction. Revenue rose by a mere 2% in the fourth quarter, but Tesla still managed to deliver a record number of vehicles for the period.
Tesla was able to push out 112,095 vehicles, 23% more deliveries than it achieved during the same period a year earlier. Revenue didn't keep up with the vehicle deliveries because the product mix has shifted to the cheaper Model 3 cars. Deliveries of the pricier S and X models are sliding, and that's naturally going to eat into the average revenue per vehicle. Thankfully, Tesla remains profitable, and it has now cranked out positive free cash flow in five of the past six quarters.
Shorts have been running for the hills this year when it comes to Tesla. There were nearly 25 million shares sold short as of mid-January, but that's a lot less than the more-than-short interest of 43 million shares in the springtime of last year.
SmileDirectClub: Up 53%
We're in the early stages of teledentistry, but SmileDirectClub is a fast grower in this space. It markets clear dental aligners that are available at a fraction of what they cost for those who get braces or other similar aligners through traditional dentists or orthodontists. Interested patrons can get a scanned impression of their teeth at local centers; the impressions are then sent to SmileDirectClub, which creates the aligners.
The model works. Revenue climbed 51% in its latest quarter, but that wasn't enough to save SmileDirectClub from being one of last year's worst-performing IPOs. The tide has turned this year as a result of a distribution deal to sell some of its dental products through the country's largest retailer as well as the end of an exclusive supplier agreement that frees SmileDirectClub to sell directly to the dental industry. Even a 53% pop in 2020 hasn't gotten the stock back to its debut price. Investing in IPOs is not easy, but momentum is finally working in favor of the teeth-straightening speedster.
