Normally, you could expect to make significant gains from stocks if you invest in them for years, perhaps decades. But given how hot the stock market has been this year, some stocks have delivered life-changing returns in a much shorter time. While chip maker Nvidia is a clear example of a top growth stock to own, given its return of over 2,500% over the past five years. There are many other stocks that have posted incredible gains in a short period of time.
These are three stocks that have done phenomenally well this year and outperformed Nvidia AppLovin (NASDAQ: APP), MicroStrategy (NASDAQ:MSTR)And Summit Therapeutics (NASDAQ: SMMT). If you invested $5,000 in each of these stocks at the beginning of the year, the total of these investments would now be worth more than $100,000. Here’s how much a $5,000 investment in each of these stocks would be worth as of Wednesday’s close, why they’ve done so well, and whether they can soar even higher.
AppLovin is a leading software company that helps monetize games and applications. The company is also eyeing a potentially more lucrative opportunity with its ad tech software in e-commerce, leaving many investors optimistic that this red-hot stock, which is up an astonishing 750% this year, can still go much higher.
If you had invested $5,000 in AppLovin stock at the beginning of 2024, you would have a profit of almost $40,000 right now. The tech company has grown revenue at an impressive pace this year, with sales totaling $3.3 billion through the first nine months of 2024, marking a 43% increase over the same period last year. Profits have also skyrocketed from $184 million to nearly $981 million during that period. The company has done so well that expectations were high that it would be added to the list S&P500. When that didn’t happen this month, shares of AppLovin fell on the news.
The stock still has a lot of potential, especially if its e-commerce business takes off. However, the risk lies in its high valuation – which trades at over 120 times trailing earnings – which suggests that significant future growth is already priced in. Investors looking to buy the stock today should proceed with caution as future returns could be limited.
Another top stock we own this year is Summit Therapeutics, and this would have turned a $5,000 investment in January into almost $36,000 today. It is striking that the pharmaceutical company has no approved products. It may seem mind-boggling, but it gives you an idea of ​​how much hope there is in the company, which has a market cap of more than $13 billion.
The reason investors rate the company so highly is that it potentially has a huge blockbuster drug in the pipeline. In a recent clinical trial, cancer drug ivonescimab outperformed Keytruda, a cornerstone of the healthcare giant Merck‘s portfolio for years, generating billions in revenue. The caveat, however, is that the trial was conducted in China and Food and Drug Administration regulators may need more diverse data before they can consider granting approval.
While it may not be too late to invest in the stock, it may be a little too early to do so given the uncertainty that still lies ahead for Summit. It doesn’t generate consistent revenue and has posted losses totaling $197 million over the past four quarters. While there could be a lot more upside for the stock if the drug is approved, there’s also a lot of risk here for investors.
Last but not least on this list is MicroStrategy. If you had invested $5,000 in technology stocks at the beginning of the year, your investment would now be worth more than $32,500. Combined with the other stocks mentioned above, that would mean a total investment of $15,000 in all stocks would be worth about $110,000 today.
MicroStrategy is technically in the technology sector as it sells artificial intelligence-powered business solutions to its customers. But it’s not core revenue growth or rising profits that are drawing investors to the stock. Instead, it’s the company’s bullish stance on cryptocurrencies Bitcoin. MicroStrategy is loading up on Bitcoins and plans to raise billions in cash to expand its already large supply, which totals over 423,000 Bitcoins.
Today, it’s risky to invest in the company because while MicroStrategy has benefited from Bitcoin’s rising valuation this year, there’s a lot of volatility in the digital asset. And just as Bitcoin’s value holds true, so does MicroStrategy’s stock price. Unless you’re comfortable with that risk, you may want to avoid the stock.
Consider the following before purchasing shares in AppLovin:
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David Jagielski has no position in the stocks mentioned. The Motley Fool holds positions in and recommends AppLovin, Bitcoin, Merck, Nvidia, and Summit Therapeutics. The Motley Fool has a disclosure policy.
Investing $5,000 in each of these three stocks in early 2024 would have created a portfolio worth more than $100,000. Today was originally published by The Motley Fool
