It is an investor's dream to be on board when a company releases record earnings, significant developments, or buyouts that result in massive gains. It is the best feeling to watch a stock in which you have invested your time, money, and energy experience a large increase in price. The following stocks have seen gains in excess of 160% over the last 12 months. With earnings being announced this week, investors must ask themselves a question: Is it time to take the profits or buy more shares? It is most difficult for an investor in this situation trying to determine what to do with a stock that has been so rewarding, since some will experience a massive sell off and others will keep rising to new highs.
Sina Corporation (SINA) has seen gains over 160% during the last year. The large gains have centered around the potential for the company during the Chinese boom market. Guidance for the company's financials were not upgraded during this time but the company continued to assure investors that the financials would be met. On April 20, the company was trading near its highest point of $143, then started a downtrend over the next two months, reaching a price of $77.
Sina missed expectations the last two quarters by an EPS of 0.02 and 0.01. On May 11, the company issued Q2 guidance below estimates, which sent the stock lower. Sina is a Chinese company that always seems to report earnings in line or a few pennies off; I am yet to see surprises. Since June 20, the stock has increased from $77.62 to its current price of $111.04. The company has already issued a decrease in guidance, yet the stock has gone up during this time and I feel the risk is high. I would sell the stock and if you are one of the many people who feel this company has a bright future, then you can purchase it after earnings. The company will not rise much but has the potential for a large drop.
Polypore International (PPO), since 2009, has been riding a constant uptrend with gains of 1,300% and over 170% during the last year. The stock is trading at the same price it was at after Q1 earnings were released. The stock went from $55.37 to $65.88 as the posted revenue was 27.8% higher year over year. The company has beaten estimates the last three quarters in a row, but analysts are making it difficult for Q2. Expectations were originally set at 0.44 per share for Q2 earnings. Analyst have since raised their expectations to 0.56 per share an increase of 69.7% year over year.
The company has surpassed analyst expectations the past three quarters and shown impressive growth. Analysts are expecting the company to post numbers similar to Q1, but I expect to see numbers much higher than this. At $67 a share, I would buy this stock; the company has shown me no reason to doubt it and I expect the trend to continue as Poypore posts record earnings.
Apco Oil & Gas (APAGF) has seen gains over 260%, trading near all-time highs at $87.92. This company has posted incredible gains for decades. If someone would have purchased $2,000 worth of shares the year I was born, the return to date would be nearly $9 million, not counting additional shares from dividends. These number are simply incredible and if not the best, they are close. This company has experienced unbelievable long term growth and with little volume. The company has a market cap over $2.5 billion, yet very few shares are traded on an average day. Revenue and total assets have increased year over year since 2006. The company saw first quarter EPS of 0.30 against 0.14 year over year.
This stock has every sign of a great investment for years to come. The cap is quite low and has room for growth that could easily double or triple. The only gray area is quarterly results that are unaudited, which always makes me nervous. However, the company has been in business for over 30 years and usually sees gains from year to year. I believe this stock to be a buy as the stock has proven itself resilient even when others in the industry have pulled back. I think this set of earnings will push the stock over $94 into new territory for all-time highs.
Skilled Healthcare Group (SKH), from July 29, 2010 until late April 2011, saw gains over 500%. The stock experienced these gains as the future looked strong and the company was always increasing FY guidance. Over the last three months, the company has lost 41% of its stock value, which still equals gains in excess of 250% for the year. This downtrend has been the result of the company increasing guidance too much and having to decrease its original figures.
Revenue has increased for the company since 2006 every year, yet its profit margins stay similar. With revenue that has increased, I would believe that the company could produce much higher EPS. This leads me to believe the problem could be operational. The stock trades at a P/E over 180, which is very high. A miss in quarterly results could prove disastrous for the company. I would not buy the company at this time as I see too much potential downside. The company could very easily see large gains after reporting earnings, but could see bigger losses if the news is bad.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in PPO over the next 72 hours.