Stocks with 10x Gain Since March: Room to Run?

Last week, CNBC featured some members of the thousand percent club, or those stocks that have gained over ten times their value since the March low. I know from surfing thousands of charts per week that many stocks have indeed posted incredible gains, but I was interested in finding out approximately how many companies could claim membership in this exclusive 1000% club.

To that end, I discovered 34 thousand percenters that are trading over a buck and listed on major exchanges. In fact, with the exception of Fredrick’s of Hollywood (FOH) that is listed on the AMEX, the rest all reside on the Nasdaq or the NYSE.

The chart below lists them all sorted according to industry grouping - click to enlarge:

Note: RL denotes Resistance Level.

Observations
The biggest gainer is Dietrich Coffee (DDRX) at over 6700%. Management deserves a gold medal for dumping many of its retail outlets and focusing on its wholesale business which has been going gangbusters.

Avis (CAR) must really be trying harder because it and Dollar (DTG) are the 1000% club runners-up. (Hertz (HTZ) is “only” up 500%). The economic factors that caused these companies’ stock prices to collapse have shifted into reverse which, according to a recent MSN Money article, is the reason for their recent gains.

Riding the coattails of the auto industry are the parts suppliers. Because of their strong balance sheets and ability to diversify operations during the recession, several of them were recently upgraded, including Arvinmeritor (ARM) and TRW (TRW).

Representing the largest industry group in the 1000% club are niche biotechs that have had successful clinical trials on key drugs. It’s no surprise that Biocryst (BCRX), a manufacturer of swine flu therapies, made the list.

Is there still some game left in these gals?
These stocks have come so far so fast that one might expect them to run out of steam. But considering where these stocks were trading pre-market swoon, there’s still a lot of room for growth. As an extreme example, consider Cell Therapeutics (CTIC) which once traded over $3000 (in 2000) and is now trading for less than $2!

Should the market reverse course, these stocks could very well be the ones to suffer first considering their recent run-up. But if the market continues behaving bullishly, many could still offer significant gains. You’ll have to do your own due diligence on this one and as an aid, I’ve included the next resistance levels based on weekly and monthly charts to help you with price targeting. (These are general guidelines only!) I’ve also included their Zacks ranking (with the 1 and 2 ratings reserved for the healthiest companies) for further reference. Only Oriental Financial (OFG) earned the Zacks highest position. It recently posted its eighth consecutive earnings surprise and despite its latest run-up, it’s trading at only four times forward earnings. Zacks recently added it to their value portfolio.

On a personal note, I’m glad to see Fredrick’s of Hollywood (FOH) busting out. (Oh, you knew that was coming!) The company recently hired a former Walmart executive as veep of product development. I sincerely hope she can breathe new life into their product line as the company’s aging business model could use a good kick in the pants.

Comments

[sterlingact...:]

I think to go one step further...which of these companies have products in their pipelines that could cause them to sky rocket again? My first thought is to look at the Biotechs...which ones have pending FDA approvals....which ones have Phase II and Phase III drugs that we will soon market reactions to fruther success? My money is on CTIC, HGSI and soon to hit this chart YMI.

Aug 25 08:46 AM

[David White:]

At the March lows the S&P 500 was trading at 11 X earnings. It is now trading at 18 X earnings. Most increases in earnings have come on "increased efficiencies". There has been little revenue growth. It seems more likely that the S&P 500 will retrace from this point rather than go up appreciably. If the S&P 500 retraces, most of the above companies will retrace faster (high growth companies usually do).

Aug 25 05:40 PM

[Dr. O:]

Surprised how many recognizable or "brand named" companies were on the list. Clearly fears of default and bankruptcy created a rare opportunity for quick massive gains in these names.

Aug 26 07:31 AM

[radicall:]

I think during the march lows - stocks were mispriced. Instead of March 2009, lets use March 2008 as a starting point. Economy had already slowed down, housing was already going down. The only thing added to the equation was the credit crisis. The credit crisis is mostly over, risk appetite is back, high yield market is working, bond spreads are down, industrial demand is picking up.

Earnings are a backward looking indicator - so look at 2010 and 2011 earnings instead. Coffee companies may be overvalued, but look at companies like TCK that is up 1000% since march lows but still down 50% from it's 2008 high.GNW down 66% from it's 2008 high but up 1200% since its low.

Nobody complained when stocks dropped 30% in a month, but have a problem with them going up 40% in a month. I think a lot of it has to do with individual companies, their real balance sheets and future earnings prospects (as opposed to "Sell All" mentality during a period of fear).

At the same time I agree that the housing crisis is far from over, there will be a "new normal" at least for 2-3 years and a lot of stocks are overpriced. At the same time - there are still a lot of undiscovered gems out there.

Take my current favorite CEL (Israel Cellcom) for example. it yields 11%, has had 15% growth yoy, is a market leader in wireless in Israel and trades at a forward PE of 2.5x.

As far as things like Citi, FRE, FNM, AIG are concerned - yes - pure speculation, but who knows - they might be worth 10x as much in 5 years. People are looking for that big jump. There is no point keeping just stable companies like utilities in your portfolio - or you will always lag the market.

Aug 31 12:38 AM