For more than a year, optimists have reveled in one heck of a bounce-back rally from a bear-market bottom. Since the coronavirus crash found its low, the broad-based S&P 500 is higher by 87% while the technology-focused Nasdaq Composite is leading the way with a 106% gain. Time and again, Wall Street has shown investors that patience pays off.
But for many stocks, trailing one-year gains have far exceeded the S&P 500's and Nasdaq's trailing 12-month returns. According to data from Finviz, 449 securities (this includes individual stocks that may have multiple classes of shares) have gained at least 200% over the trailing year, with 130 stocks rocketing higher by 400%.
These 11 stocks made people millionaires over the past year
However, 11 stocks are in a class of their own in the trailing 12-month return department. If you had put $50,000 to work in any of the following companies on April 26, 2020, you'd be sitting on $1 million, if not way more, today. Here are the present-day totals of a $50,000 investment one year ago:
- MicroVision (MVIS 2.90%): $3.87 million
- Marathon Digital Holdings (MARA -6.13%): $3.71 million
- Ocugen (OCGN -7.79%): $1.82 million
- Riot Blockchain (RIOT -2.66%): $1.63 million
- Kirkland's (KIRK -6.13%): $1.58 million
- Aemetis (AMTX -9.34%): $1.58 million
- GameStop (GME -4.09%): $1.53 million
- Sunworks (SUNW -7.78%): $1.34 million
- Blink Charging (BLNK -3.05%): $1.1 million
- Kopin (KOPN -0.82%): $1.03 million
- Aclaris Therapeutics (ACRS -6.89%): $1.02 million
While there's often little rhyme or reason to the market's biggest gainers, a few notable trends stand out behind these huge gains.
Investors are gung-ho on alternative energy stocks
To begin with, investors have piled into companies that are focused on green energy solutions. Among these 11 top performers are solar panel producer Sunworks, renewable natural gas and fuels company Aemetis, lidar sensor developer MicroVision (which is used for autonomous driving), and electric vehicle (EV) charging products and service network company Blink Charging.
Alternative energy stocks have pretty much been off to the races since early November. President Joe Biden's victory in November, coupled with Democrats taking back the Senate by the narrowest of margins in January, has paved the way for clean energy legislation to fight climate change. The expectation is that we could see clean energy companies winning sizable contracts under the Biden administration and/or basking in healthy tax credits.
Unfortunately, alternative energy stocks also look to be in a bit of a bubble. All next-big-thing investments encounter adoption hurdles. Yet, investors never seem to learn their lesson and expect a flawless uptake and adoption of new technologies.
Blink Charging is a particularly worrisome company given its minimal revenue and lack of investment in research and development. There doesn't seem to be much of a barrier to entry that would prevent other companies from directly competing with Blink's charging networks or EV infrastructure.
Crypto has investors and speculators fascinated
Another big-time share price driver over the trailing year is cryptocurrency. The rapidly rising price of Bitcoin, Ethereum, Dogecoin, and other digital currencies, has sent investors and speculators into cryptocurrency mining stocks Marathon Digital and Riot Blockchain.
Cryptocurrency miners are people or businesses that use high-powered computers to solve complex mathematical equations for groups of transactions known as a block. Doing so validates these transactions and nets the mining company a block reward. Both Marathon Digital and Riot Blockchain focus on mining Bitcoin. Thus, the higher the price of Bitcoin, the more the 6.25 Bitcoin block reward will be worth.
While both companies intend to hold on to the Bitcoin they mine, Marathon Digital went a step further and purchased $150 million worth of Bitcoin in late January for an average price of $31,168 per token. Marathon is already up more than $100 million on this purchase.
The issue with cryptocurrency stocks like Marathon Digital and Riot Blockchain is that they're arguably the worst way to gain crypto/Bitcoin exposure. There's virtually no barrier to entry, which means competition continues to increase. At the same time, Bitcoin's block rewards halve every couple of years. Tack on Bitcoin's wild volatility and concerns about this operating model's long-term validity comes into question.
Reddit investors are making their presence known
Many of these top-performing stocks have also been favorite momentum plays of retail investors on Reddit's WallStreetBets chatroom. Of course, none stands out more than video game and accessories retailer GameStop, which would have turned a $50,000 bet into more than $1.5 million in 12 months.
Beginning in mid-January, Reddit's retail investors began banding together and focusing their attention on companies with very high levels of short interest, with the goal of effecting a short squeeze. As the only publicly traded company at the time with a triple-digit percentage short interest, relative to float, GameStop became the posterchild of the short-squeeze movement.
What's been unique about GameStop is that it's been able to maintain a large portion of its gains despite its underlying business and fundamentals coming nowhere close to supporting its valuation. This is a company mired in a downward revenue spiral that's on track to lose money for a fourth consecutive year. GameStop simply waited too long to transition to a digital gaming model, and now it's paying the price for its tardiness.
Emotions have kept the company's share price irrational longer than many expected. Eventually, though, operating results always drive share price performance.
Don't forget about biotech game-changers
Lastly, it's not uncommon to find biotech stocks among the top performers over a trailing year. Any clinical-stage company that could potentially put itself on the map with a blockbuster treatment has an opportunity to be a top-performing stock. The big question is if these biotech stocks hang on to their gains.
Leading the pack over the trailing year is Ocugen. Though the company has historically focused on developing treatments aimed at curing blindness diseases, its claim to fame of late is a coronavirus disease 2019 (COVID-19) vaccine (Covaxin) developed in cooperation with Bharat Biotech.
Less than two weeks ago, Bharat shared the second interim analysis of a phase 3, 25,800-participant study involving Covaxin that's being conducted in India. The data showed a 78% vaccine effectiveness after the second dose, with efficacy against severe COVID-19 disease of 100%. This 100% figure suggests that Covaxin could be quite effective against the multiple variants of the disease.
For Ocugen to maintain or grow its market cap following a greater than 3,500% move higher, it's going to need the U.S. Food and Drug Administration (FDA) to greenlight Covaxin in the U.S. based on the large trial in India. That's not a given, which is what makes Ocugen a wait-and-see-type stock.