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Written by Adam Othman at The Motley Fool Canada
There are plenty of stocks that are capable of growing 300%, given enough time. But if you restrict the timeline a bit more, say about 11 months, the “pool” of such securities becomes relatively smaller. But it’s important to understand that this kind of growth, while not uncommon, is triggered by specific circumstances in most cases. You can’t buy stocks that have displayed that growth and expect them to repeat the feat every year.
Still, stocks capable of 300% growth within a year, favourable circumstances or not, are worth looking into.
A crypto stock
Hut 8 Mining (TSX:HUT)(NASDAQ:HUT) has grown almost 329% in 2021 (so far). The trigger for this growth is obviously Bitcoin reaching new heights (twice) within the year. And though the crypto is not showing any indication of moving to its anticipated level of US$100,000 anytime soon, especially after its most recent drastic 15% slump, the spikes have been enough to propel crypto stocks through the roof.
The good news is that with a stock like Hut 8, these spikes are not a once-in-a-lifetime occasion. In the last five years, the stock has spiked at least three times, offering 200%, 1,200%, and 330% returns, respectively. So, if you buy when Bitcoin and belatedly responding stock Hut 8 slump down to the new low and wait for the underlying asset to rise again, you might be able to capture 300% or even more growth.
A one-of-a-kind company
While metal royalties are not a unique business model, uranium royalties are, making Vancouver-based Uranium Royalty (TSXV:URC)(NASDAQ:UROY) a bit unique. But we can’t expect it to mimic the pattern of gold royalty companies that grow even when the market is strong, and gold isn’t a “hedge” focus. Uranium Royalty might respond much more promptly to the demand-supply dynamics of the radioactive metal.
Another thing you have to look into is what the royalty portfolio is like. The company has 13 active royalties right now and options for two more. The geographic portfolio is highly concentrated in the U.S. and Canada, with just one in Namibia. There are multiple royalty contract structures.
The stock has grown quite consistently over the last 12 months and has grown a bit over 300% so far, but the tide is turning, and the stock is moving downward at a steady pace.
An energy stock
The energy sector has been on a tear as a whole, and many energy stocks that were on the downhill even before the pandemic saw a great appreciation in 2021. One of these stocks is Birchcliff Energy (TSX:BIR), which has grown over 312% in 2021 so far. The stock had been on a declining trajectory well before the pandemic hit and fell at least 75% since December 2016.
It’s an intermediate oil and gas company, and the stock has seen five major spikes (and subsequent slumps) in the last two decades. The sixth spike is well underway, and it would be too soon to say if it has reached its peak yet. If the peak is still far away, Birchcliff might be a good investment right now. But if the peak is near, you might consider waiting for the stock to slump before buying it for the next peak.
The three “growth stocks” on this list that have grown over 300% in 2021 alone are different from consistent growth stocks that you can (and should) buy and hold for decades, levering the positive function of time. These stocks will grow under the right circumstances, and if you don’t cash out on time, you may have to wait several more years for the right opportunity to pull out.
The post Wow! These 3 Stocks Have Gained Over 300% This Year appeared first on The Motley Fool Canada.
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Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.