Companies that consistently increase their sales, margins, or returns on capital are usually rewarded with the best returns,
and those that can do all three for years on end are almost always the legendary stocks that return 100 times your money.
Wall Street has issued downbeat forecasts for the stocks in this article.
These predictions are rare - financial institutions typically hesitate to say bad things about a company because it can jeopardize their other revenue-generating business lines like M&A advisory.
The stocks in this article are all trading near their 52-week highs.
This strength often reflects positive developments such as new product launches, favorable industry trends, or improved financial performance.
Stocks that outperform the market usually share key traits such as rising sales, expanding margins, and increasing returns on capital.
The select few that can do all three for many years are often the ones that make you life-changing money.
While strong cash flow is a key indicator of stability, it doesn’t always translate to superior returns.
Some cash-heavy businesses struggle with inefficient spending, slowing demand, or weak competitive positioning.
A company that generates cash isn’t automatically a winner.
Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Investors looking for hidden gems should keep an eye on small-cap stocks because they’re frequently overlooked by Wall Street.
Many opportunities exist in this part of the market, but it is also a high-risk, high-reward environment due to the lack of reliable analyst price targets.
Expensive stocks often command premium valuations because the market thinks their business models are exceptional.
However, the downside is that high expectations are already baked into their prices, leaving little room for error if they stumble even slightly.
Investors looking for hidden gems should keep an eye on small-cap stocks because they’re frequently overlooked by Wall Street.
Many opportunities exist in this part of the market, but it is also a high-risk, high-reward environment due to the lack of reliable analyst price targets.
Value stocks typically trade at discounts to the broader market, offering patient investors the opportunity to buy businesses when they’re out of favor.
The key risk, however, is that these stocks are usually cheap for a reason – five cents for a piece of fruit may seem like a great deal until you find out it’s rotten.
Generating cash is essential for any business, but not all cash-rich companies are great investments.
Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities.
Unprofitable companies can burn through cash quickly, leaving investors exposed if they fail to turn things around.
Without a clear path to profitability, these businesses risk running out of capital or relying on dilutive fundraising.
Small-cap stocks can be incredibly lucrative investments because their lack of analyst coverage leads to frequent mispricings.
However, these businesses (and their stock prices) often stay small because their subscale operations make it harder to expand their competitive moats.
Whether it be online shopping or social media, secular forces are propelling consumer internet businesses forward. But it’s not all sunshine and rainbows as consumer purchasing power can make or break demand.
This unpredictability is weighing on returns as the industry has posted a flat return over the past six months, close to the S&P 500’s performance.
Growth is a hallmark of all great companies, but the laws of gravity eventually take hold.
Those who rode the COVID boom and ensuing tech selloff in 2022 will surely remember that the market’s punishment can be swift and severe when trajectories fall.
The $10-50 price range often includes mid-sized businesses with proven track records and plenty of growth runway ahead.
They also usually carry less risk than penny stocks, though they’re not immune to volatility as many lack the scale advantages of their larger peers.
Stocks in the $10-50 range offer a sweet spot between affordability and stability as they’re typically more established than penny stocks.
But their headline prices don’t guarantee quality, and investors should exercise caution as some have shaky business models.
Small-cap stocks can be incredibly lucrative investments because their lack of analyst coverage leads to frequent mispricings.
However, these businesses (and their stock prices) often stay small because their subscale operations make it harder to expand their competitive moats.
Generating cash is essential for any business, but not all cash-rich companies are great investments.
Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities.
Small-cap stocks in the Russell 2000 (^RUT) can be a goldmine for investors looking beyond the usual large-cap names.
But with less stability and fewer resources than their bigger counterparts, these companies face steeper challenges in scaling their businesses.
Growth is oxygen.
But when it evaporates, the consequences can be extreme - ask anyone who bought Cisco in the Dot-Com Bubble (Nvidia?) or newer investors who lived through the 2020 to 2022 COVID cycle.
Over the last six months, Clean Harbors’s shares have sunk to $224.14, producing a disappointing 11% loss while the S&P 500 was flat. This may have investors wondering how to approach the situation.
Over the past six months, Waste Management has been a great trade. While the S&P 500 was flat, the stock price has climbed by 9.1% to $234.12 per share. This run-up might have investors contemplating their next move.
Over the past six months, Coca-Cola has been a great trade. While the S&P 500 was flat, the stock price has climbed by 15.6% to $72.40 per share. This was partly thanks to its solid quarterly results, and the run-up might have investors contemplating their next move.
What a brutal six months it’s been for Energy Recovery. The stock has dropped 26.2% and now trades at $12.82, rattling many shareholders. This was partly driven by its softer quarterly results and may have investors wondering how to approach the situation.
Over the past six months, Tennant’s stock price fell to $77.09. Shareholders have lost 9.2% of their capital, disappointing when considering the S&P 500 was flat. This was partly driven by its softer quarterly results and may have investors wondering how to approach the situation.
Over the past six months, First Financial Bancorp’s stock price fell to $24.41. Shareholders have lost 16.7% of their capital, disappointing when considering the S&P 500 was flat. This was partly due to its softer quarterly results and might have investors contemplating their next move.
Over the past six months, Anheuser-Busch has been a great trade. While the S&P 500 was flat, the stock price has climbed by 34.4% to $70.40 per share. This run-up might have investors contemplating their next move.
What a brutal six months it’s been for Tesla. The stock has dropped 23.5% and now trades at $325.10, rattling many shareholders. This was partly due to its softer quarterly results and might have investors contemplating their next move.
Arbor Realty Trust’s stock price has taken a beating over the past six months, shedding 26.8% of its value and falling to $10.45 per share. This was partly driven by its softer quarterly results and may have investors wondering how to approach the situation.
Over the past six months, F5 has been a great trade. While the S&P 500 was flat, the stock price has climbed by 12.7% to $293.01 per share. This performance may have investors wondering how to approach the situation.
Over the past six months, JFrog has been a great trade. While the S&P 500 was flat, the stock price has climbed by 38.9% to $42.20 per share. This was partly thanks to its solid quarterly results, and the run-up might have investors contemplating their next move.
Over the past six months, Altice’s shares (currently trading at $2.22) have posted a disappointing 14% loss while the S&P 500 was flat. This was partly driven by its softer quarterly results and may have investors wondering how to approach the situation.
Since June 2020, the S&P 500 has delivered a total return of 100%. But one standout stock has nearly doubled the market - over the past five years, Cardinal Health has surged 193% to $154 per share. Its momentum hasn’t stopped as it’s also gained 31.2% in the last six months, beating the S&P by 31.9%.
Shareholders of Funko would probably like to forget the past six months even happened. The stock dropped 56.7% and now trades at $5.14. This may have investors wondering how to approach the situation.
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Over the past six months, First Financial Bankshares’s shares (currently trading at $37.48) have posted a disappointing 9% loss while the S&P 500 was flat. This may have investors wondering how to approach the situation.
