Share Prices Grow Up to 100% in Various Markets Over the Past Year!

In the stock market, share prices have the potential to rise by more than 100% in a year due to strong company performance, industry trends, favourable market conditions, and market sentiments. Factors like high earnings, product launches, mergers, and positive economic policies can drive investor confidence and attract more investment, boosting share prices.

For investors, such a dramatic increase could reflect positive investor sentiment, indicating strong confidence in the company's growth prospects and financial performance. This surge can be attributed to better-than-expected earnings and positive news such as new partnerships or product launches.

We examine growth in industries benefiting from consumer demand and market gains from investor sentiment. These include stocks involved in aerospace as more people start to travel and the development and expansion of artificial intelligence.

Goodman Group - Shares up 71% in the past year

Goodman Group is among the stock picks by Forbes Advisor Australia's editors and journalists as a growth stock, typically growing sales or earnings faster than the market by relying on innovation or unique products. Since the pandemic, Goodman Group, Australia's largest industrial property developer, has benefited from a global surge in warehouse space demand and is expanding its portfolio of data centers in Europe, North America, Japan, and China, essential for supporting the rise of artificial intelligence. The company delivered strong Q3 FY24 results, prompting an upgrade in expected operating EPS growth for FY24 to 13%. As of March 31, 2024, demand supports $12.9 billion in work in progress, with 96% of completions committed and a yield on cost for commencements at 7.0%. Notably, about 40% of WIP consists of data centers under construction.

Rolls-Royce PLC - Up by 113% in the past year

Rolls-Royce is benefiting from the rebound in international travel, earning most of its revenue from maintaining and servicing its engines. The company has raised its profit forecast and will pay a dividend for the first time since the pandemic, reflecting the CEO's efforts to restore its fortunes. Since early 2023, the CEO has focused on rebuilding the balance sheet and improving profitability through measures like reducing working capital and increasing efficiencies. Rolls-Royce expects to save over £250 million by the end of 2024 and has increased its forecast for underlying operating profit to £2.1-£2.3 billion, with a free cash flow target of £2.1-£2.2 billion, up from £1.7-£1.9 billion.

4Sight Holdings Ltd - Up 150% in the past 12 months

4Sight Holdings, a South African technology company, announced its financial results for the fourteen months ended February 29, 2024, highlighting its strategic focus on Enterprise Digital Transformation and Enterprise 5.0, leveraging AI to enhance productivity across industries. The company reported a 57.7% increase in revenue to R1 097.8 million, a 76.9% rise in operating profit to R39.0 million, and a 153.8% increase in basic earnings per share to 6.036 cents. Additionally, the cash balance grew by 57.8% to R110.8 million, and the net asset value per share increased by 29.6% to 57.8 cents.

Vertiv Holdings Co - Up 178%

Vertiv Holdings Co. (VRT), a global provider of critical digital infrastructure and continuity solutions, recently ranked among the most searched stocks on Zacks.com. For Q2 2024, Vertiv reported net sales of $1,953 million, a 13% increase from the previous year. Organic orders rose 57% with a book-to-bill ratio of 1.4x, and orders for the trailing twelve months increased by 37%. The operating profit was $336 million, up $130 million, while adjusted operating profit rose 52% to $382 million, with the adjusted operating margin expanding by 510 basis points to 19.6%, driven by increased volume, favorable price-cost, and manufacturing productivity, partially offset by investments in R&D and capacity growth.

Past performance does not guarantee future performance. Rapid increases in share prices could also lead to potential risks such as overvaluation, increased market volatility, and the possibility of profit-taking leading to a price correction. Loss is limited to 100%, and growth is limitless; share prices have the potential of continuously increasing, possibly leading to a stock split. This is because a price becoming "too high" for the market to access could motivate a stock split where existing shareholders receive additional shares, and the share price reduces to a more "accessible value" for retail investors to own full shares.

Roundup

Despite surging share prices, it’s important to evaluate the fundamentals, including revenue growth, profitability, and cash flow, to ensure the stock price is supported by solid financial performance. Markets could scrutinise high valuations if the share price does not reflect the company’s true value or is overinflated. Examining the experience and track record of the company's management can provide insights into the potential for sustainable growth and long-term success.

Investors aiming to "buy high and sell higher" should be aware of the strategy's inherent risks. This approach involves purchasing stocks that are already on an upward trajectory with the expectation that they will continue to rise. While this could lead to substantial gains if timed correctly, it also exposes investors to significant volatility and the possibility of sharp corrections if the stock's increase is driven more by speculation than fundamentals. Consider spending time in the market, rather than trying to time the market.

Thorough research and careful risk management are essential to successfully executing this strategy and avoiding potential pitfalls.