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Nvidia stock has surged nearly 1,100% in five years as it’s become a market darling and household name.
But three old-fashioned retailers have outperformed it over the same timeframe.
Between September 2, 2020, and Tuesday’s close, GameStop has gained just over 1,100%, Dillard’s has risen 1,700%, and Build-a-Bear Workshop has shot up 1,900%.
Granted, they’re smaller companies, nowhere near Nvidia’s $4.3 trillion market capitalization, which makes up a big chunk of the benchmark S&P 500 index.
But if you had $100 to invest five years ago, putting it in the video-game retailer, the department-store chain, or the plush-toy seller would have earned you more than putting it in Nvidia: $1,213, $1,801, and $2,035 each versus $1,190.
Though each is primarily a brick-and-mortar retailer, the reasons for their respective surges are distinct.
GameStop’s gain reflects its status as a meme stock and retail traders’ efforts to send it skyward again. On a split-adjusted basis, its shares went from below $2 five years ago to $80 at the height of the buying frenzy in early 2021, and now trade around $23.
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Dillard’s stock has rallied from around $31 in the fall of 2020, when many retailers suffered during the COVID-19 pandemic, to record highs above $550. The company is showing signs of a turnaround with same-store sales up 1% year on year last quarter, and earnings per share rising too, thanks to share buybacks.
Build-a-Bear stock started from a low base, but its 20-fold increase in five years is also down to resilient growth. It recently reported record first-half revenues and pre-tax income, up 12% and 32% respectively.
Two elite value investors bet on GameStop and Dillard’s during the last five years, signaling those stocks may have been underpriced.
Michael Burry of “The Big Short” fame piled into GameStop in 2019 and wrote three letters to its directors urging them to buy back its beaten-down shares and deliver a “game-changing share-count reduction.”
He cashed out his stake — which grew as large as 5.3% of the company at one point — in late 2020, before the meme-stock craze took hold.
Ted Weschler, one of Warren Buffett’s two investment managers at Berkshire Hathaway, disclosed a personal stake of nearly 6% in Dillard’s in October 2020. He exited the position by the end of 2021, potentially making several times his money depending on when he sold.
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