3 Stocks That Could Double Your Money

By Markets Fool.com

Image source: Getty Images.

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Buying a stock that doubles in short order is always exciting. Unfortunately, stocks capable of doubling quickly are often extremely risky. While a 100% gain is possible, a major loss is also on the table if things don't go right. Technology stocks, for example, often soar after going public, but you don't have to look very far to find the graveyard of high-flying tech stocks that have fallen back to earth.

Sometimes the market goes too far. Pessimism can easily get out of hand, pushing a stock down to a level that fails to reflect its true value. In these cases, a stock can easily double if sentiment begins to improve. Betting on losing stocks can be hard to stomach, but massive gains are possible if things start to go the company's way.

With all of that in mind, here are three stocks that could double relatively quickly if good news causes the market's pessimism to fade away.

Cameras and drones

In late 2014, GoPro's (NASDAQ: GPRO) market capitalization peaked above $11 billion. Today, following three disastrous quarters, the market values the company at just $2.5 billion. GoPro stock has already nearly doubled since bottoming out in May, but another double could be in the cards if the company's new products gain traction and return it to profitability.

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Image source: GoPro.

There are a few major problems facing GoPro. First, the market for expensive action cameras is only so big. The company ran up against this fact last holiday season, when revenue tumbled 31% year over year and profits turned to losses. The other problem is competition. Lower-priced alternatives will continue to test the strength of GoPro's brand going forward.

After three quarters of slumping revenue and significant losses, GoPro is betting that this holiday season will propel it back to profitability. The new HERO5 camera and Karma drone are the keys to GoPro's plan, and if the products sell well, the stock could soar. The downside: If the products fail to sell well, the stock could fall off a cliff. Karma represents GoPro's entry into the drone market, and its $800 price tag, which doesn't include a GoPro camera, makes it a wildcard going into the holiday season.

A doubling for GoPro stock certainly isn't out of the question if things go right. But a halving isn't far-fetched, either, if things go wrong.

Fitness bands

Shares of Fitbit (NYSE: FIT) have tumbled since the company went public last year, down around 70% from its peak. Despite fears that its products are a fad, soon to be eclipsed by more fully featured smartwatches, the company has continued to grow revenue at a breakneck pace. During the second quarter, sales jumped by 46%, driven by the launch of the Fitbit Blaze and Alta.

Image source: Fitbit.

While pessimism about the future has driven the stock down, another factor has been Fitbit's prolific spending. The company is investing heavily in R&D in an effort to bring new products to market quickly, aiming to stay one step ahead of the competition. During the second quarter, R&D expenses soared 162% year over year, while total operating expenses more than doubled. This spending has driven revenue growth at the expense of profits, which have collapsed in recent quarters.

If Fitbit can prove the doubters wrong, continuing to grow revenue and eventually pushing profits higher, the stock could easily double from here. That, however, will be easier said than done. Fitbit's Charge 2, its follow-up to its highly successful Charge, is reportedly not selling all that well, at least according to one analyst.

If all of this spending doesn't produce higher revenue this holiday season, Fitbit stock could tumble even further. But a successful holiday season, driven by strong sales of the Charge 2, could propel the stock to major gains.

Office supplies

Following its failed merger with Staples, office supply superstore Office Depot (NASDAQ: ODP) has seen its stock collapse. With a market capitalization of just $1.9 billion, the stock trades for right around book value, and at just 0.14 times trailing-12-month sales. The company has managed to produce a small adjusted profit though the first half of 2016, but sales are in decline.

Image source: Office Depot.

With Office Depot stock left for dead, all it will take for the stock to soar are some tangible improvements. That may be easier said than done given that the company plays second fiddle to Staples in an industry that faces some pretty serious challenges. But if the company can manage to arrest its sales decline, particularly in its business solutions segment, the market may start taking Office Depot more seriously. And there's always the chance that the company is taken private or acquired for a hefty premium. The failed deal with Staples valued Office Depot at a whopping $6.3 billion.

Office Depot is probably the riskiest of these three stocks, given the challenges the company faces. But where there's extreme pessimism, there's the chance for the stock to soar if things go right.

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Timothy Green owns shares of Staples. The Motley Fool owns shares of and recommends Fitbit and GoPro. Try any of our Foolish newsletter services free for 30 days. 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.