In the year 2024, these three stocks witnessed a fourfold increase in value, among which is a small-cap stock that a highly renowned investor holds.
A financier who manages to find a stock that rises by 15% per year has discovered an impressive victory. Typically, the S&P 500 increases around 10% per year, and investors often aim to surpass this growth by picking specific stocks. Although some individuals achieve market-beating results, they are quite rare. Consequently, it's noteworthy when a financier detects one.
If someone were to invest in a stock experiencing a 15% increase yearly, it would result in a multiplication of approximately 300% over a decade. Thus, significantly increasing a stock's value within a decade is notable. However, shares of The RealReal (REAL -1.18%), Carvana (CVNA -4.00%), and Byrna Technologies (BYRN -3.47%) have accomplished this feat astonishingly in 2024.
In essence, if such stocks had tripled in value over 10 years, it would have been remarkable. Yet, the fantastic growth happens in just one year, making each one merit further scrutiny.
1. The RealReal: Increased by 421%
The RealReal operates a prominent e-commerce platform for pre-owned luxury goods that have been authenticated. At one point, its user base was dwindling, guzzling cash, lowering the stock to a minimal valuation. In early 2023, it dipped below 0.2 times its sales -- typically, stocks trade between 1 and 2 times sales. And famous investor Michael Burry took note.
Burry is renowned for his successful and substantial bet that the mortgage market would crumble just before the Great Recession. Following this significant profit, he's continued to invest in select stocks, demonstrating a preference towards inexpensive shares, such as The RealReal stock in early 2023.
Shares held
Since initially acquiring ownership, Burry's hedge fund Scion Asset Management raised and reduced its stake in The RealReal stock, as revealed in the table below. Nonetheless, as of the third quarter of 2024, he still held 500,000 shares.
684,442
| Quarter | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 || --- | --- | --- | --- | --- | --- | --- | --- || Shares held | 684,442 | 1,500,000 | 750,000 | 654,806 | 1,412,692 | 1,000,000 | 500,000 || Percentage change | n/a | 119% | (50%) | (13%) | 116% | (29%) | (50%) |
1,500,000
Investors can only speculate why Burry favours The RealReal stock, but there are praiseworthy aspects beyond its dirt-cheap valuation. For example, the number of active consumers on the company's platform recently reached its highest level since the fourth quarter of 2022. Furthermore, the company's take rate for the third quarter of 2024 reached an all-time high of 38.6%. This led to generating $2 million in Q3 free cash flow, which is only the second time it's generated positive free cash flow.
750,000
These beneficial developments explain why The RealReal stock was among the best performers in 2024, and Burry's ability to recognize value enabled him to purchase it opportune moment.
654,806
2. Carvana: Increased by 323%
1,412,692
In 2022, Carvana shares plummeted below $4 due to investor worry about bankruptcy. However, the company negotiated its debt, alleviating this fear. The skyrocketing stock prices in 2024, including, are a direct result of this.
1,000,000
Carvana streamlines the typically laborious task of purchasing a car by digitalizing the entire process. Its approach has proven extremely popular among consumers, as evidenced by its 200% revenue growth over the previous five years. Hence, it's undeniable that the company has achieved success. Nonetheless, it faces financial challenges.
500,000
For instance, 2024 has been among Carvana's most prosperous years for sales. However, could sales slow down in 2025? It's essential to consider that auto loan defaults are rising rapidly and are at their highest levels in nearly four years. If its financial partners decide to buy fewer of its loans due to increased risk, it could hinder the company's momentum in 2025.
(50%)
Additionally, Carvana entered a temporary agreement in 2023 to reduce the interest it pays on its debt. However, it could result in higher payments when its two-year contract expires with lenders in 2025. Consequently, Carvana may utilize a significant portion of its cash flow to service its debt, potentially affecting investor returns for the foreseeable future.
Percentage change
3. Byrna Technologies: Increased by 379%
n/a
Few people are familiar with Carvana, and fewer still have heard of The RealReal due to Michael Burry's involvement. But almost no one has heard of Byrna Technologies.
119%
This small business manufactures self-defense devices that resemble handguns but use non-lethal projectiles filled with chemical irritants or hard plastic projectiles. Sales have been growing rapidly.
(50%)
Byrna refers to its main gadgets as "launchers," initially releasing them in 2019. As of November 2024, they've managed to sell an impressive 500,000 units. Their management holds a positive outlook, aiming to capture 5% of the non-gun-owning market and 10% of the gun-owning market. This ambitious goal adds up to a potential $17.5 billion, given their $73 million in trailing-12-month revenue–a significant expansion possibility.
(13%)
Despite its modest size, Byrna exhibits appealing financial indicators. To start, its third-quarter 2024 revenue soared by 194% compared to the same period in 2022, hitting a record $20.9 million. Secondly, the organization boasts over $3 million in net income between January and September 2024, a stark contrast to its $8 million loss during the same period in 2023. Lastly, while it has around $20 million in cash on hand, it also boasts zero debt, which fortifies its financial structure for its scale.
116%
Navigating at a 10x sales multiple, Byrna's shares might not come off as a bargain. However, considering its pursuit of a substantial market, rapid growth, profitability, and debt-free position, this diminutive stock might still see significant long-term growth, even after its quadrupling in value in 2024.
(29%)
- Investors looking to replicate the success of the financier in the original text might consider purchasing shares of these three companies, as they have significantly outperformed the S&P 500's annual growth rate. For instance, The RealReal saw a remarkable increase of 421% in 2024.
- In the case of Carvana and Byrna Technologies, their shares also tripled in value, with Carvana achieving a 323% increase and Byrna Technologies a 379% increase, in 2024. These exceptional returns could be an attractive proposition for individuals interested in high-growth investing.
