Four Stocks That “Could” Double in 2013
Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The market has traded flat for the last five years. Therefore, to find an investment that doubles in a year’s time is quite an accomplishment. This can be done with stocks in every industry, in all ranges of valuation. In this piece I am looking at four stocks that “could” double. And I am looking at exactly what these companies must do in order to achieve this feat; it is then up to you to determine if it will occur.
Herbalife (NYSE: HLF) has risen nearly 13% in the last three trading sessions after posting a December loss of 35%. According to the fundamentals, Herbalife is growing steadily and appears to have very attractive trading metrics. However, the company has been crushed in 2012 thanks to the thesis of several shorts.
A couple weeks ago, Bill Ackman provided one of the best 342 page reports that I have ever seen. Ackman pointed out weaknesses throughout the company’s operational approach and questioned the company’s legitimacy, calling it a “sophisticated pyramid scheme.” But supposedly Herbalife is in the process of hiring advisors, attorneys, and others to defend the company and seek legal action against Ackman. Therefore, if successful, Herbalife could double in 2013.
The acquisition of Global Crossing was supost to be the answer to all of Level 3’s (NYSE: LVLT) problems. The acquisition has added revenue gains of more than 70% and has improved the company’s margins, yet still the stock has traded lower since the acquisition, thanks to a higher debt load. However, Level 3 is now expected to post a profit in 2013, trading with a forward P/E ratio of 60.92. The company does have more fiber than any other communication services company; therefore the stage has been set for the stock to trade higher. Currently trading with a price/sales of just 0.79, the stock could very well double if in fact it achieves profitability.
SodaStream (NASDAQ: SODA) has had a very successful year by all measures, adding distribution networks with Bed Bath & Beyond and Wal-Mart, and continuing to grow its top and bottom line by more than 50%. The fast-growing company is now trading with a forward P/E ratio of just 16.70 and has traded mostly flat for the last five years. Now, moving into 2013, the company continues to expand with distributors, launch new products, and spend more on advertising. If the company can continue this, and maintain its growth, then I see no reason why the stock wouldn’t double throughout 2013.
Mellanox (NASDAQ: MLNX) is now trading with a forward P/E ratio of under 14.0 and is trading at a 50% discount to its 52 week high. The company has been able to maintain growth of more than 100% year-over-year, which is expected to continue in 2013. The only real threat is Intel, and the fact that Intel is developing a product line to compete with Mellanox. If Mellanox can prove itself to be dominant with its InfiniBand lineup then it can return more than 100% in 2013.
All of the stocks on this list are highly speculative. However, it is often the more speculative stocks that end up performing the best, such as Bank of America and Sprint in 2012. These stocks have all either underperformed the market or have traded lower in 2012, and have the potential to double in 2012. As a result, I would pay close attention to these stocks and add them to your watchlist of stocks that “could” post large gains in the year ahead.
BrianNichols is long MLNX and SODA. The Motley Fool owns shares of SodaStream. Motley Fool newsletter services recommend SodaStream. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!