Had you plunked $10,000 in GameStop this year you'd have much to celebrate: $119,427 to be exact. Now you can understand the frenzy over the heavily shorted stock that's not even in the S&P 500.
Even after a painful 31% drop Monday to 225.01, shares of GameStop are up nearly 1,100% just this year so far. No S&P 500 stock comes even close. The top-performing S&P 500 stock this year is consumer discretionary and Leaderboard member Tesla, which is up 19%. Had you invested $10,000 in Tesla in January, you'd have $11,900. Poor Elon Musk.
And the S&P 500? Forget about it. Your $10,000 invested in SPDR S&P 500 Trust would be worth $10,057. The Invesco QQQ Trust, is only slightly better, turning your $10,000 into $10,277. Even iShares Silver Trust, the ETF individual investors are now jumping into, would only be worth $10,891. And AMC Entertainment is up 527%, turning $10,000 into $62,736;
But don't let the big GameStop stock gains fool you into thinking the company is something it's not.
GameStop: Not In The S&P 500 (But Would Be No. 369)
GameStop's prospects aren't great. It sports a low 62 IBD Composite Rating. That means its chart and fundamentals only outperform 62% of all companies' And the company is seen losing money in 2021.
Specifically, GameStop's adjusted profit per share is expected to plummet 92% in 2020 when it reports. And next year, analysts think it will lose nearly $200 million or $2.10 a share. GameStop sells video games in its primarily mall-based stores. Gamers are increasingly downloading their games online. Successful investors know it's better to use time-tested rules to buy top growth stocks instead.
But individual investors are piling into GameStop anyway. That's pushing the stock higher and prompting large investors betting against it to cover their losses. And that's making the company worth nearly $16 billion, which is more than about a quarter of the companies in the S&P 500.
There are ways to use options to play GameStop, too. And some are trying to spread their bets in struggling retailers using ETFs instead.
Reading The Message From GameStop Stock
The rally in GameStop is a signal on many levels. It's a reminder to investors to know how important it is to buy and sell at the right time.
But it's also showing a shift in the S&P 500 sector leadership. Many beaten-down S&P 500 sectors are finally starting to pull ahead. GameStop stock's consumer discretionary sector is the second-best among the 11 S&P 500 sectors this year. The Consumer Discretionary Select Sector SPDR is up 3.3% this year.
And this year's top sector? Long-struggling energy. The S&P 500 Energy Select Sector SPDR ETF is up 4.5% this year.
Just know while it's fun counting your newfound riches on GameStop stock and other highly shorted stocks now, you need to have rules to follow when the trade goes the other way.
What $10,000 Invested In Battleground Stocks Is Worth Now
Gains on high-interest and heavily shorted stocks this year
| Investment | Symbol | $10,000 Investment Now Worth* | Year To Date Stock % Ch. | Sector | Composite Rating |
|---|---|---|---|---|---|
| GameStop | $119,426.75 | 1,094.3% | Consumer Discretionary | 62 | |
| AMC Entertainment | $62,735.85 | 527.4% | Communication Services | 57 | |
| Ligand Pharmaceuticals | $18,102.56 | 81.0% | Health Care | 98 | |
| Bed Bath & Beyond | $17,038.29 | 70.4% | Consumer Discretionary | 93 | |
| National Beverage | $15,498.23 | 55.0% | Consumer Staples | 89 | |
| Tanger Factory Outlet Centers | $14,467.87 | 44.7% | Real Estate | 43 | |
| AMC Networks | $14,445.07 | 44.5% | Communication Services | 88 | |
| World Acceptance | $13,615.73 | 36.2% | Financials | 87 | |
| Macerich | $13,130.27 | 31.3% | Real Estate | 25 | |
| Tootsie Roll | $12,545.45 | 25.5% | Consumer Staples | 18 | |
| iShares Silver Trust | $10,891.33 | 8.9% | Financials | N/A | |
| PetMed Express | $10,876.48 | 8.8% | Consumer Discretionary | 64 | |
| Invesco QQQ Trust | $10,276.66 | 2.8% | Financials | N/A | |
| SPDR S&P 500 ETF Trust | $10,057.24 | 0.6% | Financials | N/A |
Sources: IBD, S&P Global Market Intelligence, * — gains from Jan. 1, 2021 to Feb. 1, 2021
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