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The Final Six Top-Performing Stocks of 2016

In part 3 of my series on the top-performing stocks of 2016, here are six more that managed to more than triple their share price last year.

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Here’s my last installment of the 14 top-performing stocks of 2016 (the first three stocks were in my column on January 5 and the next five were in yesterday’s column). This edition will cover the final six stocks that pulled off the impressive feat of finishing the year with gains over 200%.

Let’s get right to them!

Top-Performing Stock #9: Navistar International (NAV) +255%

Navistar is a maker of medium and heavy trucks, including the International brand of buses. (Just for the sake of trivia, the company used to be one of the world’s premier makers of agricultural machinery, International Harvester.)

Navistar International is kind of an outlier among the top stocks of 2016. Its performance wasn’t driven by a bounce in commodity prices or the recovery of a particular industry. What it has in common with most of the other top stocks is that its timing was perfect; after falling from 40 in 2014, NAV managed to hit bottom (at 6) in January 2016. So it captured its whole rebound rally during the calendar year.

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Navistar suffered through several rounds of accounting scandals and a dip in orders for its military vehicles a few years back, and will always be dependent on big contract wins to stay healthy. But the company emerged from that rough patch with lower costs and a concentration on its core business, having sold off several sidelines. There’s no way to tell whether Navistar’s recovery has a second act.

Navistar International (NAV) is #9 on our list of top-performing stocks from 2016.

Top-Performing Stock #10: Hi-Crush Partners (HCLP) +234%

There’s no mystery about why Hi-Crush had a great year. Three of the four specialty chemical companies that topped our 200% gain threshold for the year are fracking sand suppliers, including Hi-Crush. The company was formed in 2012 specifically to acquire reserves of the premium monocrystalline sand that is used as a proppant to increase oil & gas production in hydraulic fracturing wells.

After three years of triple-digit percentage growth in sales, the downturn in exploration and production caused by lower oil prices caused the company’s sales to dip in 2015. HCLP fell from 72 in November 2014 to below 4 in late February 2016, then rode the recovery in oil prices to steady growth.

So it’s the familiar story: A stock that has dropped off the edge of the world finally hits bottom and rides a major commodity rebound to excellent gains. HCLP is a master limited partnership (MLP) that used to pay a dividend that yielded more than 10% a year. They suspended the dividend in 2015 when revenue went sour, and there may be some investors looking forward to a resumption.

HCLP

Top-Performing Stock #11: SunCoke Energy (SXC) +227%

There are two coal companies on this year’s list of top performers (see Westmoreland Coal, which is #14 below), but that’s deceptive. SunCoke Energy is actually a coke company, which means it makes a coal-based product called coke that’s used in blast furnace production of steel. And that means that SunCoke’s success is more closely related to the resurgence of steel producers like AK Steel and U.S. Steel (which are big SunCoke customers and were the 4th and 5th best performing companies of 2016) than to Westmoreland.

SunCoke, in addition to its U.S. coke business, also gets a little revenue from a production facility and sales in Brazil and from coal transport and shipping, but over 90% of revenue still comes from coke sales in the U.S.

The chart shows that SXC made most of its gains for the year from three surges on expanded volume, one in late January, one in February and one in October. The company reported losses in Q1 and Q2, but got back on track in Q3. Analysts are expecting earnings to leap by 733% in 2017.

SXC

Top-Performing Stock #12: Nvidia (NVDA) +224%

Nvidia is a real phenomenon, in part because it isn’t a rebound story. NVDA has been in an uptrend since 2013, although its rate of advance steepened in late 2015 and skyrocketed in 2016.

Nvidia stock was featured three times during 2016 in Cabot Top Ten Trader (in February, April and May) and continues to be buoyed by the popularity of its chip designs for game consoles (which were in a big upgrade cycle during 2016), by incorporation of its chips in cars, datacenters and artificial intelligence applications and by its inclusion in virtual reality headsets and systems.

Since Nvidia doesn’t have the overhead of factories, its after-tax profit margins were over 20% all year. You can see the four volume spikes evenly spaced along the chart as the company routinely exceeded analysts’ expectations in quarterly reports during the year.

NVDA

Top-Performing Stock #13: U.S. Silica Holdings (SLCA) +203%

U.S. Silica is like a more mature version of Hi-Crush (#10 above); it got about two-thirds of its revenue from the sale of sand as proppants in fracking oil & gas wells. But U.S. Silica also has customers in the glass, fillers, chemical and ceramics industries, which give it a little insulation from the volatility of the fracking business.

While SLCA started the year with a small correction (as did just about every stock in this report), its advance during the year was smoother, with fewer sizable pullbacks. The company’s higher stock price made it attractive to institutional investors, who signed on in increasing numbers during the year.

SLCA was featured three times during the year in Cabot Top Ten Trader (once in August and twice in October). The company controls about 400 million tons of silica, so the future may be bright.

SLCA

Top-Performing Stock #14: Westmoreland Coal (WLB) +201%

Westmoreland Coal is a Colorado-based coal miner that controls 1.2 billion (with a B) tons of proven and probable reserves of coal in Montana, Wyoming, Texas and North Dakota. The company mostly supplies coal-fired electricity generating plants, although it also owns a couple of its own in North Carolina.

The company has actually been losing money for years, with losses soaring from 42 cents per share in 2013 to $10.86 per share in 2014 and $11.36 in 2015. That’s a trend that will put pressure on a company’s stock price, and sure enough, WLB fell from 45 in August 2014 to 3.44 in January 2016.

WLB really made three moves in 2016, the first in January and February lifted the stock to 8 in March, where it rested for two months, then to just under 10 in June, where it spent almost five months digesting its gains. Another rally in November after a positive November 1 earnings report kicked WLB to near 20 in early December and it coasted to the end of the year with a gradual correction of a point or so. Westmoreland is a huge company (market cap is over $325 billion) and news that it has beaten expectations can still attract a ton of investors.

WLB

So that’s it for the top-performing stocks of 2016, a year of big bounces in beaten down industries and a couple of continuing success stories. If you want to keep up with the top-performing stocks of 2017, Cabot Top Ten Trader is the best advisory to catch investment-grade stocks early in their advances.

Click here to learn more.

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Paul Goodwin is a news writer for Cabot’s free e-newsletter, Wall Street’s Best Daily.