Lazy Investors Are Missing Out On 44% Gains From This 1 Stock

These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But you could have done much better than average by investing in one stock, like the Gym Group. Sharp-eyed investors who bought shares in the company one year ago have seen their investment soar by 44%, a far cry from index fund investors.

Passive investing has become increasingly popular over the past few decades. After all, why bother with the hassle of actively picking individual stocks when the overall market has done pretty well on its own? But that approach often comes at a cost, as it relies on the weighted performance of all the constituent stocks in the index, which means that investors will get dragged down by the dogs as much as they'll be lifted up by the stars.

Index funds are also not immune to broader economic trends, meaning that they can make just as big of a drop when things go south. Compare this to individual stocks, where savvy investors can focus on companies that are making a solid fundamental case for growth.

One reason why most investors find it hard to deliver knockout returns is because it's difficult to pinpoint which stocks have what it takes to produce multibagger returns. For instance, the Gym Group has done fantastically well over the past year, with a solid balance sheet that should have set off alarm bells for possible significant growth. Such stocks do not always follow the index and can offer investors greater upside potential.

So how can investors generate these outsized returns rather than just following the general performance of the index? The key might be in seeking out solid companies, looking at their underlying financials and past performance, and sticking to an investing plan. Or even better, concentrate on firms with increasing profits, low debt and rising cash generation – key ingredients of a successful investment recipe.

And it's not as if this stock was hard to spot, either. The Gym Group has delivered stellar performance over the years, consistently reporting strong financials and meeting analysts' expectations. To see that all this productivity and planning ends up in a relatively high return for investors is pretty rewarding. Investing in the stock has reaped 44% for those who ventured in a year ago.