Following a tumultuous first quarter last year, investors have been privy to one heck of a bounce-back rally. Since hitting its bear market low on March 23, 2020, the broad-based S&P 500 has gained 82% through April 5, 2021. It's also tacked on nearly 20% over the trailing six months.
But for some lucky investors, a 20% return has represented just the tip of the iceberg over the past six months. There are five stocks with market caps of at least $1 billion that have delivered millionaire-making gains since early October.
Marathon Digital Holdings: 2,801% gain
The top-performing company over the trailing-six-month period is cryptocurrency miner Marathon Digital Holdings (MARA -5.35%). If you had invested, say, $100,000 near the beginning of October, your initial sum would be worth about $2.9 million today.
Cryptocurrency mining companies use high-powered computers to solve complex equations that validate groups of transactions known as a block. Marathon is competing with other mining companies to validate Bitcoin (BTC -0.38%) transactions and received a block reward of 6.25 Bitcoin, worth about $360,000 as of April 5.
In addition to mining Bitcoin and holding onto the tokens it procures, Marathon also purchased $150 million worth of Bitcoin in late January for an average of $31,168 per token. With the largest and most popular digital currency going for about $58,000 per token, Marathon has made quite a bit of money on its investment in just over two months.
The thing for investors to keep in mind is that cryptocurrency mining is incredibly risky. It's extremely competitive, and Bitcoin's halving events every couple of years reduce the amount of tokens awarded for resolving blocks. While there's no denying Marathon is on fire, its future relies solely on Bitcoin heading higher and not innovation. That's a scary prospect.
Ocugen: 2,066% gain
Investors who put their money to work in clinical-stage biotech stock Ocugen (OCGN) are also laughing their way to the bank. In just a six-month stretch, their initial investment would be higher by over 2,000%!
While the company's name accurately describes a pipeline focused on curing blindness diseases and disorders, it's the company's coronavirus disease 2019 (COVID-19) vaccine candidate that's been all the buzz.
Ocugen developed Covaxin in cooperation with Bharat Biotech. In a 25,800-participant phase 3 study in India, Covaxin demonstrated a vaccine efficacy (VE) of 81%.
Now, I know what you might be thinking: 81% VE is solid but it's lower than what we've seen from the likes of Pfizer/BioNTech, Moderna, and Novavax. However, Ocugen notes that Covaxin was "shown to induce immune responses against multiple protein antigens of the virus." In plain English, its COVID-19 vaccine might be able to minimize virus mutations, which other vaccines don't look capable of doing. That gives Covaxin an interesting use case moving forward.
Ocugen's future and share price will depend on whether or not data from the large-scale trial in India can be used to gain emergency-use authorization in the United States.
Riot Blockchain: 2,047% gain
Bitcoin's outperformance over the past six months has led to not one, but two cryptocurrency mining stocks rising by more than 2,000%. Not wanting Marathon to have all the fun, Riot Blockchain (RIOT -3.55%) is the third-best performer among billion-dollar stocks over the trailing six months.
The biggest difference between Riot and Marathon is that Riot Blockchain never used its cash to purchase Bitcoin. Instead, it'll likely hang onto some or all of the Bitcoin it mines.
Another difference is that Marathon is a larger mining operating. Whereas Marathon expects to have a little over 103,000 miners in operation by the end of March 2022, Riot Blockchain should max out north of 39,100 miners. More than two-thirds of the company's Antminers on order are slated to arrive between now and October.
But just like Marathon, we're talking about a company completely reliant on an external factor (Bitcoin) to grow its operations. Worse yet, if the price of Bitcoin were to fall considerably -- Bitcoin declined by at least 80% on three separate occasions over the past decade -- it's not clear that Riot Blockchain's operating model would be sustainable. There's a reason I've dubbed crypto mining as the worst way to invest in Bitcoin.
GameStop: 1,814% gain
I know, what a shock, right? It shouldn't be surprising in the least to find video game and accessories retailer GameStop (GME 0.94%) on this list, considering it's the hottest large-cap stock of 2021. A prescient investment in the gaming retailer six months ago has returned more than 1,800%.
While I'd like to say there's a fundamental or rational reason behind GameStop's ascent, there really hasn't been. The closest thing to a positive that can be said about the company is that e-commerce sales grew by 191% in 2020 and 309% during the holiday season.
The vast majority of GameStop's gains over the past six months have been tied to short squeezes and FOMO (fear of missing out) euphoria. Since the middle of January, predominantly young and novice investors on Reddit's WallStreetBets chatroom have been banding together to buy into companies with high levels of short interest. Back in mid-January, no publicly traded company sported higher short interest than GameStop. This made it the perfect target for a short squeeze.
Unfortunately, GameStop's operating results don't come close to supporting its current valuation. Total sales declined 21% last year, and the company's key to getting back to profitability involves closing stores and further cutting costs. Though GameStop's healthy cash position means it's not going to disappear, its lack of momentum on the operating front suggests its share price will eventually head much lower.
Zomedica: 1,259% gain
Lastly, shareholders of clinical-stage veterinary drug and diagnostics company Zomedica (ZOM 0.54%) have a lot to be thankful for. Over the past six months, shares of the company soared by nearly 1,260%.
The bad news is that most of Zomedica's gains, as with GameStop, aren't anything worthwhile. It began in January, when the company received a boost following a namedrop on a YouTube video by Tiger King star Carole Baskin. It should be noted that Baskin was compensated for this video mention. The company also caught the eye of retail investors in early February, leading to that aforementioned FOMO euphoria that pushed its penny stock share price into the stratosphere.
The one tangible positive for Zomedica is that it's begun commercial sales of Truforma, its point-of-care diagnostics system for cats and dogs. Being able to sell this diagnostic system means it's a revenue-producing company now.
Although Zomedica is swimming in cash, it's also issued more than 305 million shares of stock since the year began. With 947.3 million shares outstanding, it's going to be extremely difficult for the company to ever produce meaningful earnings per share. Then again, profitability looks to be many years off.