Normally, you might expect to achieve significant gains from stocks if you invest in them for years, perhaps decades. But given how hot the stock market has been this year, some stocks have produced life-changing returns in much shorter time frames. While chipmaker Nvidia is an obvious example of a top growth stock to own given its more than 2,500% return over the past five years, there are many other stocks that have produced incredible gains in a short stretch.
Three stocks that have done phenomenally well this year and have outperformed Nvidia are AppLovin (NASDAQ: APP), MicroStrategy (NASDAQ: MSTR), and Summit Therapeutics (NASDAQ: SMMT). If you invested $5,000 into each one of these stocks at the beginning of the year, the total of those investments would be worth more than $100,000 right now. Here’s a look at how much a $5,000 investment in each of these stocks would be worth as of Wednesday’s close, why they have done so well, and if they can still rise higher.
AppLovin is a high-flying software company that helps with monetizing games and applications. It’s also eyeing a potentially more lucrative opportunity involving its ad-tech software in e-commerce, which has many investors bullish that this scorching-hot stock, which is up an astounding 750% this year, could still go much higher.
If you invested $5,000 at the beginning of 2024 in AppLovin stock, you would be sitting on a near-$40,000 profit at this point. The tech company
has been growing sales at an impressive pace this year with revenue through the first nine months of 2024 totaling $3.3 billion, representing an increase of 43% over the same period last year. Profits have also skyrocketed from $184 million to nearly $981 million during that time frame. The company has done so well that expectations were high that it would be added to the S&P 500. When that didn’t happen this month, shares of AppLovin nosedived on the news.
The stock still has a lot of potential, especially if its e-commerce business takes off. The risk, however, lies in its high valuation—trading at more than 120 times trailing earnings—which suggests significant future growth is already priced in. Investors who want to buy the stock today should tread carefully as its future returns could be limited.
Another top stock to own this year has been Summit Therapeutics, and it would have turned a $5,000 investment back in January into nearly $36,000 now. What’s noteworthy is that the pharma company doesn’t have any approved products. It may seem mind-boggling, but it gives you an idea of how much hope there is in the business, which has a market cap north of $13 billion.
The reason investors are valuing the company so highly is that it potentially has a huge blockbuster drug in its pipeline. In a recent clinical trial, cancer drug ivonescimab outperformed Keytruda, which has been a cornerstone of healthcare giant Merck‘s portfolio for years, bringing in billions in revenue. The caveat, however, is that the trial was conducted in China, and regulators from the Food and Drug Administration may need more diverse data before they might consider granting approval.
While it may not be too late to invest in the stock, it’s arguably a bit too early to do so given the uncertainty still ahead for Summit. It’s not generating any consistent revenue, and it has incurred losses totaling $197 million over the past four quarters. Although there may be a lot more upside for the stock if the drug obtains approval, there’s also plenty of risk here for investors.
Last but not least on this list is MicroStrategy. If you invested $5,000 at the beginning of the year into the tech stock, your investment would now be worth more than $32,500. When combined with the other stocks listed above, that would mean a total investment of $15,000 across all of them would be worth approximately $110,000 today.
MicroStrategy is technically in the tech sector as it sells artificial intelligence-powered business solutions to its customers. But it’s not revenue growth from its core business or soaring profits that are attracting investors to the stock. Instead, it’s the company’s bullish stance on crypto and Bitcoin. MicroStrategy has been loading up on Bitcoins and plans to raise billions in cash in order to grow its already large stockpile, which totals more than 423,000 Bitcoins.
Investing in the company today is risky because while MicroStrategy has benefited from Bitcoin’s surging valuation this year, there is a lot of volatility in the digital asset. And as Bitcoin’s value goes, so too could MicroStrategy’s stock price. Unless you’re comfortable with that risk, you may be better off avoiding the stock.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AppLovin, Bitcoin, Merck, Nvidia, and Summit Therapeutics. The Motley Fool has a disclosure policy.
