In a year where the S&P/ASX 200 Index (ASX: XJO) just broke even, it's worth having a look at shares that outperformed, and outperformed strongly.
These 3 ASX shares have smashed it out of the park this year, and here's why.
Xero Limited (ASX: XRO)
One of Australia's ASX darlings, Xero has steadily climbed its way from $80 a share at the end of 2019, to $145.63 at the time of writing — an impressive 82% return for the year.
Back in March, the workforce collectively gave up the daily commute for a short walk to their new home desk. Many businesses were forced to adopt a cloud-based environment. For many companies, it meant expanding upon their existing licenses for cloud-based software.
Xero was well placed for this shift, with the company now commanding a 2.453 million subscriber strong base (adding 396,000 new subscribers, year over year).
As reported in the company's first half FY21 results, annualised monthly recurring revenue grew by 15% to $877.6 million, earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 86% to $120.8 million, and net profit after tax skyrocketed to $34.486 million from $1.366 million the previous year.
Xero's market capitalisation is $21.36 billion at the time of writing.
Mineral Resources Limited (ASX: MIN)
Not quite the size of Fortescue Metals Group Limited (ASX: FMG), Mineral Resources is often forgotten. Yet, the company has had a remarkable run of its own this year. The Mineral Resources share price has rocketed from $16.50 at the end of 2019 to $36.65 at the time of writing — that's a 122% return.
Iron ore prices this year have marched forward with no reprieve. This is reflected in Mineral Resources' reported revenue of $2.1 billion, up 41% on FY19. Where the numbers really start to shine in its annual report to shareholders is the net profit after tax – up from $165 million in 2019 to $1,002 million this year.
A couple of weeks ago UBS also initiated coverage on Mineral Resources with a "buy" recommendation, stating "MIN offers exposure to a growing mining services business and attractive commodities exposure to iron ore and lithium."
Mineral Resources' market capitalisation is currently $6.91 billion, while Fortescue Metals Group is $73.83 billion.
Lynas Rare Earths Ltd (ASX: LYC)
Passed up by Wesfarmers Ltd (ASX: WES) late last year (after the conglomerate originally offered a takeover bid of $1.5 billion), the Lynas share price lost its lustre and began to fall in early 2020. After kicking the year off at $2.29 a share, the Lynas share price fell as low as $1.065 in March. However, it has clawed its way back. Today Lynas shares are trading for $3.95 – a 71.88% return for the year.
The strong rally this year could be attributed to the ongoing trade tensions with China. Given Lynas is a rare earths supplier outside of China, it has positioned itself as an alternative.
Despite the company's falling revenue and EBITDA, a 16% and 40.6% decline, respectively, the market appears to be focused on the long-term trend towards a higher demand for rare earth metals.
However, Lynas was recently downgraded to a "neutral" by UBS, which believes the rising electric vehicle market has already been priced into the current Lynas share price
