In sports, few things are more exciting than watching a team return from a seemingly insurmountable deficit to win. I grew up watching the Joe Montana Hall of Fame at its height, taking his reputation as Notre Dame’s “Comeback Kid” and turning it into four Super Bowls for the San Francisco 49ers. Since then, Tom Brady has defended the nickname, with many hoping the 43-year-old quarterback would lead the Tampa Bay Buccaneers to victory in the Super Bowl LV.
Investors also love a good turnaround story. It is always inspiring to see a company in difficulty recover and recover from the challenges of the past, especially when it results in great gains for those who foresaw it.
Image source: Getty Images.
In 2021, several actions are declaring themselves as the Comeback Kid of the year. Next, we’ll take a closer look at three candidates who have already doubled in 2021, with the aim of seeing if they can be prepared for bigger things to come.
TLRY data by YCharts.
1. Tilray
Tilray (NASDAQ: TLRY) was one of the stock market sweethearts in the late 2010s. When marijuana stocks rose to prominence, Tilray was among the best-known cannabis growers on the market.
Still, when tough times hit marijuana stocks, Tilray suffered a substantial blow. Tilray shares lost more than half their value in 2020.
Unlike many companies, however, Tilray decided to do something about it. The cannabis grower announced ambitious plans in late December to merge with other marijuana products Aphria (NASDAQ: APHA). The merger will create the largest marijuana company in the world by revenue, placing it in a strong position to compete against other marijuana industry giants, as marijuana investors expect the US to decriminalize marijuana at the federal level with a new government in Washington.
Under the terms of the deal, Tilray’s shares will be the survivors, with Aphria investors receiving 0.8381 Tilray shares per Aphria share. However, Aphria is the largest company and its CEO will lead the combined company going forward.
Since then, Aphria’s solid gains have only helped to strengthen Tilray’s actions. Tilray grew more than 125% in 2021.
Even after its gains so far this year, Tilray is just back where it started in 2020. This gives the cannabis stock a lot more room to grow if the US marijuana markets start to open up more aggressively for the company Canadian.
2. Tellurian
Telluric (NASDAQ: TELL) it was the most hit share among this group of three, with shares falling more than 80% in 2020. The natural gas specialist’s connection with the energy industry was the source of its fall, as the pandemic COVID-19 rocked the markets of energy and caused huge disruptions that caused the entire sector to drop dramatically during the year.
Tellurian hopes to take advantage of the United States’ natural gas supply boom to export it to other countries. The company’s proposed liquefied natural gas (LNG) terminal in Louisiana faced obstacles in early 2020, putting project development in jeopardy.
However, the energy market has strengthened somewhat, causing oil prices to return above $ 50 a barrel. This does not directly affect Tellurian, but earlier this month, company co-founder Charif Souki said the LNG expert is likely to start building driftwood in the summer. This has caused shares to almost triple so far in January.
Despite the massive recovery, Tellurian is still below 45% since the beginning of 2020. The energy markets have much more to recover before conditions return to normal, but it will be important for Tellurian to make the most of environmental improvements if you want to stay on course for a complete return.
3. TransEnterix
Finally, TransEnterix (NYSEMKT: TRXC) it went through a major setback in 2020. The shares lost almost 60% of their value during the year, as the small medical device manufacturer continued to post substantial losses without much in the form of revenue.
TransEnterix reached immense heights in mid-2018, with investors praising the prospects for its Senhance Surgical Robotic System. However, the company has so far failed to deliver significant sales of the system, recording only $ 8.5 million in revenue in 2019 and only $ 2.07 million in the first nine months of 2020.
The big news for TransEnterix recently came from Europe, where regulators approved their Smart Surgical Unit accessory for the Senhance system. The so-called “augmented intelligence” system offers machine vision features that make it easier for surgical professionals to perform procedures. Investors responded by sending TransEnterix shares up more than 500% in the year to date.
After its huge gains in 2021, TransEnterix shares have risen more than 150% since the end of 2019. This makes the shares a big bet, especially due to the company’s weak sales record. But if TransEnterix can really start selling its systems, there may still be many more advantages for inventory.
Big risk for big reward
Investing in recovery actions has always involved substantial risks. If the return does not fully materialize, brief gains in share prices can quickly reverse.
However, when things continue to go well, even greater gains are possible. If you have a high risk tolerance, looking for stocks like these three can yield some promising candidates for your portfolio.
Among these three companies, TransEnterix and Tellurian are more speculative, counting on considerable execution to reach their full potential. Tilray offers the clearest path to continuous gains in a favorable environment.