American Airlines (AAL) -- Up 70 percent in 2014
Investing in airlines has historically been a losing game. Warren Buffett -- arguably the greatest investor alive -- was asked about the prospects of buying into the industry now that consolidation has helped improve the sector's bottom line during last year's annual report.
He didn't mince any words: "Investors have poured their money into airlines and airline manufacturers for 100 years with terrible results," he said at the time, eventually calling it a "death trap" for shareholders.
American Airlines has been bucking the historical trend. It was cleared to merge with US Airways late last year, and the synergies are already starting to pay off. Analysts see profitability more than doubling between last year and next year, and American has blown past Wall Street profit targets with ease since completing the corporate combination.
Tesla Motors (TSLA) -- Up 60 percent in 2014
Hot stocks rarely repeat as winning investments a year later, and it's against that backdrop that Tesla Motors seemed ripe for a breather in 2014 after soaring 344 percent last year. The darling stock of the automotive industry closed out 2013 as a stock that many value investors called overvalued, and now it's putting the pedal to the metal to make it even more richly priced. Tesla is trading at more than 200 times this year's projected profitability, and that's steep even by Tesla's own lofty historical valuation.
Tesla's big gains in 2014 have come as it ramps up production of its Model S sedan, builds out its Supercharger network to provide complimentary battery charges to Tesla owners and made a big splash in battery production by investing big bucks into a factory with excess capacity.
Barnes & Noble (BKS) -- Up 52 percent in 2014
There is little reason to get excited about traditional bookstores. Digital distribution has made paperbacks and magazines less popular, and sometimes it seems as if its cavernous bookstores would be deserted if not for folks coming in for coffee or to buy gifts for bibliophiles without realizing that they've already gone digital. Barnes & Noble has its digital platform -- Nook -- but those sales have been slumping as Barnes & Noble can't keep up with the Amazon's (AMZN) Kindle and Apple's (AAPL) iPad as media consumption devices of choice.
Despite the inevitability of its demise, investors have warmed up to Barnes & Noble this year. It recently announced plans to separate its businesses, and the market cheered on the development. But we're ultimately talking about two businesses going the wrong way.
Strayer Education (STRA) -- Up 52 percent in 2014
It isn't easy to make a living as a for-profit post-secondary educator. Enrollment levels are down across many leading institutions; the federal government is looking at student grants and loans; and many are questioning the effectiveness of some programs.
Analysts still see revenue declining, but they've been singing a different tune about Strayer's profitability. They've been inching income forecasts higher, and even then we find Wall Street pros getting schooled with Strayer consistently surpassing expectations over the past year.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Tesla Motors. The Motley Fool owns shares of Barnes & Noble and Tesla Motors. Try any of our newsletter services free for 30 days.