Key Points in This Article:
It can be challenging holding onto winning stocks due to the temptation to secure profits or reduce risk.
Selling high-performing stocks too early can limit long-term portfolio growth and trigger costly capital gains taxes.
A long-term investment strategy with carefully chosen stocks helps investors avoid the pitfalls of market timing.
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Knowing When to Let Go
Deciding when to part with a winning stock is a tough call, especially when its value has surged dramatically. The instinct to secure gains or reduce exposure can be strong, but cashing out too early risks missing out on significant future growth.
Selling a high-performing stock may seem like a safe move, but it often means forfeiting the potential for even greater returns. New investments may not match the momentum of the original winner, and selling triggers tax liabilities that chip away at profits. As legendary investor Warren Buffett suggests, holding onto winners for the long haul is often the smartest strategy.
By choosing stocks with strong fundamentals and staying committed, investors can avoid the pitfalls of market timing. The following two stocks have more than tripled off their 52-week lows, but still have plenty of room to run.
Archer Aviation (ACHR)
Archer Aviation (NYSE:ACHR), a leader in electric vertical takeoff and landing (eVTOL) aircraft, has seen its stock climb an impressive 261% from its 52-week low of $2.82 per share, hitting $10.79 per share yesterday. Despite a recent 15% drop triggered by concerns over rival Joby Aviation (NYSE:JOBY) saying the path to FAA certification may not be as smooth as previously believed, Archer’s long-term prospects remain robust.
Its recent $850 million stock offering strengthens the eVTOL’s liquidity, with over $1 billion in cash to fund its commercialization plans, including the Midnight aircraft, which is wending its way through the FAA certification labyrinth. Strategic partnerships, such as with Jetex for infrastructure development and Anduril for military applications, position Archer to tap into the $1 trillion urban air mobility market some analysts project the industry to hit by 2040.
The Wall Street consensus leans toward a “Strong Buy,” with an average price target of $11.75 per share, suggesting 18% upside. Archer’s international test flights in Abu Dhabi and a $500 million deal in Japan further bolster its growth trajectory.
Despite short-term volatility, Archer’s innovative technology and expanding market presence signal significant potential for future gains.
Robinhood Markets (HOOD)
Robinhood Markets (NASDAQ:HOOD) has delivered a staggering 639% return from its 52-week low, driven by its commission-free trading platform and appeal to younger investors. Trading at $105.68 per share, Robinhood has capitalized on a retail investing boom, with 23 million funded accounts and growing assets under custody.
Its expansion into margin trading, crypto offerings, and new features like retirement accounts has diversified revenue streams, reducing reliance on transaction-based income. The company’s recent profitability, with positive net income in the second quarter, reflects operational discipline and scalability.
Robinhood’s acquisition of TradePMR and potential entry into wealth management signal ambitious growth plans. Despite a high valuation at 15 times 2027 projected revenue, its user growth and innovative tools, like AI-driven analytics, position it to capture a larger share of the $7 trillion U.S. brokerage market.
With no significant setbacks reported recently, Robinhood’s momentum and broadening financial ecosystem suggest it can continue its upward climb.
Key Takeaways
Archer Aviatiom and Robinhood Markets exemplify the potential of holding onto high-performing stocks despite massive gains of 261% and 639% from their 52-week lows, respectively.
Archer’s leadership in the eVTOL sector, bolstered by over $1 billion in cash and strategic partnerships, positions it to capitalize on the $1 trillion urban air mobility market, even after a recent dip due to a stock offering and legal concerns. Robinhood’s commission-free platform, expanding user base, and diversified offerings like crypto and wealth management fuel its trajectory in the $7 trillion brokerage market.
Both stocks face risks — regulatory hurdles for Archer and valuation concerns for Robinhood but their innovative approaches and strong market positioning suggest significant upside remains. By resisting the urge to sell prematurely and focusing on long-term potential, investors can harness the growth of these dynamic companies, aligning with the principle of letting winners run.
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