If you really wanted to make money over the past year, buying oil stocks was the way to go as rampant inflation sent gas prices soaring. Monkeys throwing darts would have been hard-pressed to not find a massive winner in the energy sector.
Yet as market sentiment turned away from previously high-flying stocks in the technology market and traders put their money in more defensive positions, a number of consumer-oriented stocks have turned in outstanding performances. The following four stocks all would have turned a $10,000 investment into at least $21,000, but most would have done even better than that.
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Golden Entertainment
1-year performance: up 111.9%
It wasn't a smooth path higher for casino operator Golden Entertainment (GDEN -1.99%), which owns 10 casinos in Nevada and Maryland, but it was a year of recovery that saw it break through the $1 billion revenue threshold for the first time ever.
Nine of Golden Entertainment's 10 resorts are in Nevada, but most of them target the locals market. While it has one casino on the Las Vegas Strip, its premier Strat casino, hotel, and retail center, and most of its operations are in Laughlin and Pahrump, Nevada. It also owns pubs and taverns that offer slot machines and other amusement devices.
The casino stock was coming out of the pandemic with strong pent-up demand for gaming activities, but was still tripped up by outbreaks of COVID-19 variants. Even so, it has been able to generate good free cash flow -- about $270 million in 2021 -- while paying down some debt (it has about $1 billion in long-term debt remaining).
Because Golden Entertainment does rely mainly on locals rather than just the travel and tourism market, there is a layer of cushion, but an economic downturn could imperil its recovery. Still, investors would have seen their $10,000 investment turn into $21,100 had they bet on the casino one year ago.
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Houghton Mifflin Harcourt
1-year performance: up 206.5%
Book readers are probably familiar with Houghton Mifflin Harcourt (HMHC), one of the biggest educational and commercial publishers. What you might not realize is that throughout its history, it has struggled financially, declared bankruptcy, and been sold to different groups of investors.
While Houghton Mifflin was on the rise through much of 2021, its shares spiked after it agreed to be bought out yet again by private equity firm Veritas Capital for $2.8 billion, or $21 per share in cash, which was a 36% premium to the price it had been trading at.
The deal is expected to be completed in the second quarter of 2022 and will allow Houghton Mifflin to focus on its education business, as it had sold off its consumer publishing division last year.
Had you put $10,000 into Houghton Mifflin Harcourt a year ago, the investment would have graduated into $30,650 today.
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Dillard's
1-year performance: up 214.8%
Who says the department store is dead? Dillard's (DDS 0.16%) stock soared higher throughout most of last year as the reopened economy saw shoppers return to the mall. It also beat analyst sales and profit forecasts.
But a strong performance means it will start going up against tough comparable sales. UBS analysts didn't think Dillard's was up to the task of beating those elevated numbers in 2022, and initiated coverage of the department store with a sell rating and a stock price target 44% below where it had been trading. Shares have pretty much traded sideways since. The analysts might be right about this one.
In a recent survey, geolocation data analytics firm Placer.ai found that high-end department store chains have recovered all of the customer traffic they lost from the pandemic and then some, but mid-tier retailers like Dillard's remain below their 2019 traffic levels.
Still, a bet on Dillard's and a reopening economy early last year would have paid off handsomely, even after the collapse of its stock, turning a $10,000 investment into $31,480 today.
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Avis
1-year performance: up 319.9%
It wasn't just department stores benefiting from the reopened economy; car rental company Avis Budget Group (CAR 1.26%) showed that trying harder can pay off. But it really stepped on the accelerator in November when it reported strong third-quarter results that easily left analyst expectations in the slow lane.
Sales doubled and Avis banked over $1 billion in adjusted earnings, causing its stock to nearly quadruple in one day before investors had to settle for a mere triple by the end of the trading session. Since then Avis stock has drifted lower, losing about half its value, though it's been stepping on the gas again in recent weeks. Over the past month the stock is 62% higher.
Heightened demand for travel, whether for vacations or business, is keeping Avis and other rental companies on the go -- but it's possible soaring gas prices and inflationary pressures will dampen consumer enthusiasm for driving. AAA says the average price of gas is $4.25 a gallon now, which is below the records recently set but still at historically elevated levels.
Still, an investment in Avis Budget Group last year would have turned $10,000 into almost $42,000 today.
