Insider Monkey

15 Best-Performing Stocks in the Last 12 Months

Fahad Saleem
10 min read

In This Article:

In this article, we will take a look at the 15 best-performing stocks in the last 12 months. To see more such companies, go directly to 5 Best-Performing Stocks in the Last 12 Months.

The US stock market has been performing unusually well in 2023. The most recent catalyst came after the Federal Reserve’s fight against inflation started signs of bearing fruit. However, inflation is still at elevated levels and many believe we are still not out of the woods. But as markets begin to turn the corner, it’d interesting to see the possible gainers of the coming months. Small-cap stocks took a beating amid recession warnings, as they have in almost every recession during the past. But small-cap stocks also rebound faster than other companies when recession or fears of recession ends. A report by Jennison Dryden shares some data to back this point. The report said that small-cap stocks have “significantly outperformed” large-cap stocks in the first year following nine out to the last nine recessions. The report concludes that having an exposure to small-cap stocks during hard financial times could increase your chances of enjoying profits once the economy begins to rebound.

There is a variety of reasons why small-cap stocks are the first ones to suffer when things go south. Aswath Damodaran, the famous finance professor at Stern School of Business at New York University, discusses in detail some of these reasons and also crushes some myths on this topic in a research paper. The professor quotes Jeremy Siegel who said in his book on long-term returns of stocks that the small-cap stock premium effect mostly comes due to huge gains of small-cap stocks. Damodaran also said that while it’s true that returns of small-cap stocks are much volatile that large-cap stocks, it’s also a fact that “a portfolio of small cap stocks has a distribution that is similar to the distribution for a large cap portfolio.” The professor also adds that the responsibility of the investor becomes huge during small-cap investing to take caution since there isn’t much help available from market analysts when it comes to research reports and ratings for small-cap firms. Another important factor to take into account during small-cap investing is the importance of time horizons. For a small-cap investor the time period for holding stocks and staying invested should be higher if they want to realize the true gains of this investing strategy.

But why are we discussing the merits of small-cap investing in an article about best performers in 2023? The reason is simple and would become clear as you read our list of the best performing stocks over the last 12 months. Many of these companies were small companies working on innovative products and services. This effect was also explained in a report Lord Abbett entitled “Finding Resilience and Opportunity in Small Cap Stocks.” The report said that the firm’s “investing team” has found that the next generation growth leaders are often small companies with “ability to turn research and development spending into strong revenue growth.” These companies also have “tangible proof of business success” and stock price actions that signal the market’s recognition of success.

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