The holy grail of investing its finding a stock that can appreciate to multiple times what was paid for it, which many refer to as the "multibagger." The only way to achieve this lofty goal, however, is also the most difficult part of the process -- hanging on to a stock that has already booked significant gains.
While some investors will get the urge to sell, it's better to understand what drove those outsize gains in the first place and decide whether there could still be more to come.
With that in mind, let's look at streaming pioneer Roku (NASDAQ: ROKU), cancer detector Guardant Health (NASDAQ: GH) and e-commerce car seller Carvana (NYSE: CVNA) to see why each company has doubled so far in 2019 as of May 16, and what the future could hold.
Image source: Roku.
Roku: up 170%
Streaming platform Roku is riding the wave of back-to-back earnings reports that were better than many expected. After posting 46% year-over-year revenue growth in the fourth quarter, Roku followed that up with 51% growth in the first quarter -- which is historically the softest quarter for the company. Platform revenue, which is primarily composed of advertising, grew even more quickly, producing year-over-year revenue growth of 77% and 79% for the fourth and first quarters, respectively.
It wasn't just the financial metrics that shined. Roku's active accounts have grown in excess of 40% year over year for four successive quarters. At the same time, engagement has increased, as streaming hours have accelerated in each of the previous four quarters, up 57%, 63%, 69%, and 74%, all year over year.
As the migration away from broadcast television and toward streaming continues, Roku is uniquely positioned to benefit from the trend. This one's a keeper.
Guardant Health: up 106%
One of the most frightening words a patient can hear is "cancer." Survival rates have increased in recent years, however, and the key has been early detection. That's where Guardant Health comes in. The company has developed a liquid biopsy that helps detect cancer with a simple blood test by identifying the DNA and RNA shed by cancerous tumors.
The stock has been on a tear and with good reason. Since Guardant Health went public in Oct. 2018, the company has released two earnings reports -- and each has been equally impressive. Its full year revenue was up 82% year over year in 2018, and started off 2019 with a bang, increasing 120% compared to the prior-year quarter.
While the technology is currently being used to detect late-stage non-small-cell lung cancer, it recently announced plans to study its liquid biopsy test to detect colon cancer. Any additional indications will increase Guardant Health's already substantial runway.
Image source: Carvana.
Carvana: up 100%
It might be hard to believe that the age of e-commerce extends to vehicle shopping, but that's what Carvana has done. The company sells autos directly to consumers in over 100 U.S. cities from its website and growing network of automated vending towers.
The company is working to consolidate a fragmented market and business is good. During the first quarter, units sold increased 99% year over year, while revenue grew 110%. This was on top of 105% and 121% increases, respectively, for the full year 2018.
Carvana is expecting that growth to continue. For the full year, the company is forecasting unit sales increases of 78% and revenue to grow 82%, both year over year. The company also plans to add between 55 and 60 new markets this year, bringing the total to between 140 and 145. That would cover 65% of the U.S. population.
With a history of spectacular growth and more on the way, Carvana may just be getting started.
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