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Up 80%+ in a year: Should you buy these 3 big gainers?

The S&P/ASX200 (INDEXASX: ^AXJO) (ASX: XJO) has seen some big movers in the past 12 months. Most of those companies have been resource stocks, but there were a few surprises:

source: Google Finance

A2 Milk Company Ltd (Australia) (ASX: A2M) is one of the biggest gainers, up 123% in the past 12 months as profit upgrades and growing sales have powered shares higher. The company recently bought a stake in supply partner Synlait Milk (ASX: SM1) and is considering paying its maiden dividend next year. With ongoing expansion in several major markets, A2 appears to have a strong chance of growing its earnings in the future and I wouldn’t bet against the company over the long term. However, shares are looking pretty pricey and management has sold a significant number of shares in recent times. I’m not a buyer of A2 shares today.

Worleyparsons Limited (ASX: WOR) is up a surprising 94% due to increased resource activity and a takeover bid that valued the company at $11.80 per share. Management declined the bid, arguing that it undervalued the company and that the current subdued resource environment didn’t adequately reflect current earnings or a fair share price. With the recent slide in resource prices, investors will have to pay close attention to management’s plans for growing earnings and profits in order to assess what a fair value for the company’s shares might be. Although Deutsche Bank recently slapped a buy rating on the company, I’m not keen on Worleyparsons today.

Webjet Limited (ASX: WEB) gained 86% as rising profits continued the company’s meteoric rise. The most recent report showed $39 million in profits and saw the company upgrade its full-year guidance to $80 million in earnings before interest, tax, depreciation, and amortisation (EBITDA). Webjet seems to be making strong inroads in a number of markets, and the company’s recent ventures into Asia also show some promise. However, the market is well and truly aware of Webjet’s potential, and prospective buyers should consider whether the company’s future growth will live up to today’s prices.

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Motley Fool contributor Sean O'Neill owns shares of A2 Milk. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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