by Will Ashworth | October 10, 2013 11:15 am
Between the current government shutdown and looming debt ceiling crisis, it’s almost no wonder stock have been showing some weakness of late. From Sept. 18 until Oct. 8, the Dow Jones Industrial Average shed nearly 6%, while the S&P 500 fell 4%.
But even without the broader market’s momentum, an impressive 29 stocks trading on U.S. exchanges managed to hit all-time highs on Oct. 8, according to Barchart.com.
Given the volatility in the markets over the past two weeks or so, it’s amazing that any equities are reaching new highs, quite frankly.
Of course, that recent upwards momentum doesn’t help investors if it isn’t going to continue. With that in mind, I sorted through the 29 stocks that rose to the top earlier in the week to find which ones are capable of keeping up the momentum.
Here are the top three stocks for investors to consider:
Year-to-Date Return: 44%
Wolverine World Wide (WWW) simply isn’t the same company it was a year ago — and its record third-quarter results are proof. WWW completed a $2 billion acquisition of Collective Brands last year, adding the Sperry Top-Sider, Saucony, Stride Rite and Keds brands to its portfolio.
Transformational deals rarely come along, but this one surely is close. Prior to the deal, Wolverine’s Heritage Group — which includes Wolverine, Cat Footwear, Bates, Sebago, Harley-Davidson and HyTest — accounted for approximately 41% of its revenue. Today, the group represents just 20% of the company’s overall revenue.
That’s good, though, because WWW boasts a more balanced business model with three strong operating segments instead of only two. And each segment grew revenue year-over-year, with Lifestyle and Performance segments posting respective gains of 10% and 13%.
Plus, each of the acquired brands have contributed to the overall success of Wolverine’s business so far in 2013, while WWW also has a nicely growing global presence. The result: Wolverine raised its full-year adjusted earnings to at least $2.73 per share — which itself is 19% year-over-year growth.
For the cherry on top, Wolverine World Wide is focused on growing its business while also paying off its debt as quickly as possible. Its net debt of $994 million at the end of Q3 is 15% lower than than on the transaction closing date.
Year-to-Date Gains: 77%
Amira Nature Foods (ANFI) went public last October at $10 per share — and now the stock is trading around 40% higher than that offer price. Compared to IPOs in general, however, the past year’s been anything but smooth. ANFI dropped 19% on its first day of trading and didn’t rise above its offering price until early September.
Investors were disappointed with both the pricing and the gross proceeds, as Amira raised only $90 million. Originally, it had intended to repay $85 million of its debt with some of the net proceeds and was only able to repay $52 million.
But that’s all in the past now — and future for Amira Nature Foods is another story altogether. In fact, Jefferies & Co. (one of the underwriters) raised its 12-month target price on ANFI from $14 to $21, reiterating its “buy” rating. It sees four specific things driving Amira’s business: Strong results, U.S. expansion, debt refinancing and the further roll-out of its UK business.
The strong results are obvious. In the first quarter, revenue grew 38% while EPS expanded 62%. But for 2013, Amira generated just $6.8 million of its $414 million in revenue from the states. That’s a growth opportunity; it can and will do better. And the company does continue to gain ground in the UK — good news considering, with the exception of India, Britain is Amira’s fastest-growing market.
In terms of debt, ANFI reduced its obligations in the first quarter by 13% and it has refinanced some of its expensive Indian debt, which will lower interest costs. Plus, Amira’s enterprise value as a multiple of EBITDA is half that of Hain Celestial (HAIN), its much larger peer.
Year-to-Date Gains: 100%
I don’t usually recommend companies that are losing money, but Mazor Robotics (MZOR) is an exception and I believe it is at the beginning of a very long run. Mazor is based in Israel and its Renaissance guidance system is transforming spinal surgery.
The potential market for Mazor is estimated by some to be as much as $14 billion. While such numbers are always wildly inflated and should be taken with a grain of salt, the estimate still gives you an idea of just how big the opportunity is — especially considering Mazor’s revenue in the first six months of the year was just $11.8 million.
No wonder Mazor Robotics stock has been sizzling. MZOR began trading as an ADR in late May and, in less than five months, has doubled in price to over $20.
Smart money believes in the stock too. Larry Feinberg runs a healthcare hedge fund and his firm invested $7.5 million in Mazor back in August 2012, and another $7.5 million over the summer. It’s not his biggest investment by a long shot — but it just might turn out to be one of his best.
As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.
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