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3 High-Risk, High-Reward Stocks You Need to Know About

Stocks in this article: SCCO FELE DRI

Why now: When the recession hit in 2008, fine and casual dining were among the industries hit the hardest. Several moderately-priced eateries including Friendly's Ice Cream, Bennigan's and Tony Roma's have all faced financial difficulties since then, up to and including bankruptcy, as was the case with Friendly's.





While Darden Restaurants was lumped into the left-for-dead group at the time, the company has defied the skeptics by continuing its march into record earnings levels.

In fact, had it not been for the mere 1.3% dip in fiscal 2010's (mostly calendar 2009) revenue, Darden would have posted higher sales in seven of the past eight years. Profits have grown in six of the past eight years, and not once during that time has the company booked an annual operating loss. That's not bad.

Granted, the past is no guarantee of future results. But after a long-term track record of sales and earnings growth -- and during a time when many of its competitors were hitting a wall -- it's quite clear Darden has found a winning formula.

3. Southern Copper (SCCO - Get Report)

Very few metal miners are pure plays. Southern Copper is no exception. But as far as industrial metals are concerned, it's one of the biggest and "most pure" copper plays investors can own.

Why now: It's a bit of a misnomer that copper miners want to see sky-high prices. It's nice for a while, but it can invite unwanted competition into the marketplace. Excessively high prices eventually lead to a supply glut and a subsequent meltdown of the entire copper market.

Conversely, dirt-cheap copper leaves little room for margins, and that's assuming anybody actually wants to buy the stuff. Sometimes there's no price low enough to sell any meaningful amounts of it.

Said another way, there's a "sweet spot" for copper prices, where established miners can sell enough to be profitable, storage facilities aren't getting backed up with oversupply and buyers are willing to pull the trigger.

Right now, we're in just such a sweet spot. The London Metal Exchange's warehouse-stored copper supply reading hit a multi-year low in May, though it's not at rock-bottom lows from 2007. This means the supply isn't drained, yet it isn't piling up on itself.

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