What Have Been The Best Performing Stocks Over the Past Five Years?
From BarChart.com [link no longer available], here are the top five performing stocks over the past five years:
- Pharmacyclics (PCYC) +5,596%
- Cheniere Energy (LNG) +2497%
- Akorn (AKRX) +2265%
- Accelerate Diagnostics (AXDX) +2219%
- Regeneron Pharmaceuticals (REGN) +1814%
A few ideas on how you might use this information in a class discussion and tie it back to investing concepts:
- What industry are four of the top performing five companies operating in?Biotech/biopharmaceutical Note: If you want students to research this, you can send them to Yahoo Finance Profile where they can type in the ticker (four letters) and pull up information on each company.
- What are characteristics of that industry? High risk due to long, costly process to develop drugs and bring them to the market. It is also an industry where blockbuster drugs that a company discovers can yield billions of dollars in sales.
- What investing concept does this tie to? The relationship between risk and return; the greater the risk, the higher the potential return. Important to let students know that high risk does not guarantee higher returns. In fact, during this five year period, I would hazard a guess that hundreds of biotech companies went out of business as they ran out of money before discovering a wonder drug. If you had invested in them, the value of your investment would be $0.
- How about Cheniere Energy? What trend has this company capitalized on? Cheniere has benefited from the “fracking boom” in the United States, which has significantly increased domestic oil and natural gas production. Many expect this boom to make the US a major exporter of energy and Cheniere owns a major natural gas terminal in Louisiana that benefit from this.
- If you had invested $1,000 in each of these companies five years ago, how much would your investment be worth now?
One way to calculate this is: (Ending Stock Price / $1000) – 1 = Percentage Change In Stock
So, for Pharmacyclics the equation would be: (X/1000) – 1 = 5596%. Solving for X, the answer is $56,960 would be the current value of your $1,000 investment. Quite a return!!!
About the Author
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.