Home Business News The fundamentals that generated 1,700% stock returns over the last 5 years

The fundamentals that generated 1,700% stock returns over the last 5 years

by Thea Coates Finance Reporter
9th Feb 24 10:41 am

The following five stocks increased by thousands of percent. What was behind those monster gains?

Cory Mitchell, an analyst with trading education website Trading.biz breaks down the fundamentals that unfolded on these stocks’ meteoric rises.

Here’s a chart showing the path of these five stocks over the last five years.

Nvidia (NVDA): 1,747%

Nvidia rallied more than 1700% over the last five years.

During that time, here is how sales and earnings progressed:

  • Earnings per year (EPS) increased from $1.87 in 2018 to $7.58 in 2023.
  • Analysts project EPS could be $20.92 in 2025.
  • Sales increased from $12.4 billion in 2018 to $44.9 billion in 2023.
  • Analysts Project sales could reach $93.8 billion in 2025.

Nvidia’s rising stock price isn’t only due to strong growth, it is also due to expected strong growth going forward. Expectations of the future drive prices in the present.

Metrics such as P/E are not very useful in rapidly growing stocks. Through 2023 the stock climbed and P/E reached as high as 258. As higher earnings were attained the P/E dropped to near 60 and the price continued higher in 2024.

e.l.f. Beauty (ELF): 1,819%

e.l.f. rallied more than 1800% over the last five years.

During that time, here is how sales and earnings progressed:

  • Earnings per year (EPS) increased from $0.32 in 2018 to $2.13 in 2023.
  • Analysts project EPS could be $3.31 in 2025.
  • Sales nearly quadrupled between 2018 and 2023.
  • Analysts Project sales growth of 24% for 2025.

ELF once again has this pattern of both rising EPS and sales, coupled with the expectation that the strong growth will continue.

Since 2020 the stock has often traded at well over a P/E of 50, and often over 70. Despite high valuations, the stock has seen a strong price rise as earnings have been increasing as well.

Cassava Sciences (SAVA): 2,168%

SAVA saw a meteoric rise from a price of $1.03 five years ago to a high of $146.16 in 2021. It then fell as much as 90% from those highs and is currently trading near $25. The stock briefly traded north of $150 following its IPO in 2000 before falling to nearly $1 per share.

The company never generated any sales and EPS fluctuated in the negatives from 2018 to 2023. Expectations were very high but never came to fruition. That said, the stock is still up more than 2100% from where it was five years ago and was up even more at certain times.

Such big up-and-down moves are not uncommon for biotechnology and pharmaceutical companies which produce products that may make it to market and create large sales, but end up failing to do so.

Celsius Holdings (CELH): 4,137%

Celsius Holdings has seen fantastic sales growth from $53 million in 2018 to $1.1 billion in 2023.

EPS was -$0.08 per share in 2018 and analysts project $0.76 per share in 2023 and $0.96 per share in 2024.

P/E ratios have always been very high even during the years EPS was positive. This shows that a stock’s performance isn’t always based on what a company is doing right now, but on what investors expect it to do in the future.

Analysts are still projecting growth of 56% per year EPS growth over the next five years.

Super Micro Computer: 4,265%

SMCI is the biggest gainer over the last five years.

During that time, here is how sales and earnings progressed:

  • Earnings per year (EPS) increased from $1.52 in 2018 to $12.78 in 2023.
  • Analysts project EPS could be $28.43 in 2025.
  • Sales increased from $3.7 billion in 2018 to $9.3 billion in 2023.
  • Analysts Project sales could reach $19.4 billion in 2025.

The super strong earnings growth didn’t kick in until 2022. Since then the stock has had a 10-fold increase. This has been driven by rising earnings coupled with strong expectations for future growth. Analysts are projecting average EPS growth of 48% per year over the next five years.

Stock analysed

The study of best-performing stocks includes stocks with a market capitalization currently over $1 billion, a stock price above $5, an average volume of over one million shares per day, and are listed on a major U.S. exchange.

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