I wrote about superperformance stocks in April and decided to do a follow up article on the progress of the potential superperformance stocks. Some of the stocks already made meaningful progress and it proves that much can happen in just over one month.
General market environment
The general market environment has been very good since mid-April. We saw a mini-correction at the beginning of April, and then the market took off, with S&P 500 (SPY) reaching all-time highs along the way. A positive general market environment is needed if you want a higher probability of success in the journey to find superperformance stocks. And indeed, the stocks from my previous article thrived in these market conditions.
Tesla (TSLA) has been the top performer, and it is the first stock to achieve triple-digit returns. Tesla rose 103% since it was featured in my article in early April. The move came after the company pre-announced a first profitable quarter and raised guidance, and the gains were enhanced further with the reported earnings that substantially beat analyst estimates and company guidance. Tesla has almost all the traits of a superperformance stock. Although it still lacks earnings, there is ample evidence that the company will become profitable in the future. On the other side, there is evidence in massive revenue increases in recent quarters, tied with a new product - the Model S, and a "rock star" CEO Elon Musk, and he is often named the new Steve Jobs. So, we have a strong management, massive revenue growth and new products - the characteristics many past superperformance stocks had. Tesla had a high volume reversal yesterday and it might have made a short-term top, and may consolidate its massive gains.
3D Systems (DDD) is the second-best performer with a 56% return since early April. The stock made a strong recovery and reached new all-time highs on May 14, after a steep correction that brought the stock down 42% in February and March. 3D Systems continues to ride the wave of positive 3-D printing trends. The company recently announced a new share offering to fund new acquisitions, as the management continues its aggressive growth strategy. The company delivered earnings in line with estimates, but announced a new acquisition a day after reporting earnings and raised guidance. 3D Systems is the first 3-D company that signed a deal with a major U.S. retailer. Staples (SPLS) will sell 3-D printers through its web-site and in a limited number of stores. 3D Systems has new products, robust earnings and sales growth and a capable management.
Santarus (SNTS) continued to deliver strong growth in the latest quarter, and is up 24% since early April. Revenue grew 73% in the first quarter, and EPS was $0.25, up substantially over last year's one cent profit. The company also raised full-year revenue and earnings guidance to reflect the expected stronger performance this year. Santarus benefited from increased revenue from its main drug Glumetza, as well as strong performance of Zegerid, as sales of Zegerid almost tripled from Q1 2012. The company received FDA approval for Uceris in January, and the company saw revenue of $6.6 million in the first quarter from the new drug. Substantial increases in earnings and sales, coupled with rising guidance and strong future expectations and new products fit very well in the potential superperformance stock category.
Proto Labs (PRLB) is up 23% since the article was written. The company reported earnings and revenue that beat analyst estimates in late April. Revenue grew 25% over Q1 2012, and net income increased 73%, and gross margin expanded 330 basis points to 62.4%. Proto Labs continues to execute well, and has strong operating momentum in North America, Europe and Japan, and the company recorded record revenues in all three regions. Robust sales and earnings growth together with expanding margins put the company in a good position to award its shareholders with more gains.
It has been a very good time for potential superperformance stocks in recent weeks. They enjoyed the general market uptrend and their own growth efforts that yielded good returns for their shareholders. But nothing goes straight up, and corrections will occur and are a part of the process in achieving stellar performance. You must keep an eye on the progress of your holdings, as the deterioration of growth or in future expectations can have an adverse effect on the company's share price.