5 Best-Performing S&P 500 Stocks of 2011
U.S. stocks have tumbled 15 percent from a 52-week high three months ago, as investors moved out of riskier assets on signs the economy is slowing. Still, a diverse group of S&P 500 stocks, fromMasterCard to Lorillard, have climbed as much as 84 percent this year.
The S&P 500, the benchmark for equity investments in the U.S., is now down almost 8 percent in 2011 after two years of strong gains. The decline is largely the result of a tumultuous August, when the U.S. saw its triple-A credit rating downgraded by Standard & Poor's for the first time in history following a tense debate over the debt ceiling. Stocks, as measured by the S&P 500, have slumped 10 percent this month.
The poor handling of the debt issue by Congress is only one reason investors are more pessimistic than optimistic today, as many other concerns emanating from around the globe keep piling up. Europe's debt woes, driven by Greece, threaten to stall economic growth. Japan fell back into a recessionafter the earthquake and subsequent tsunami in March, and China, the engine of global growth, is stalling amid higher interest rates.
Banking and technology stocks have borne the brunt of declines in the U.S. Hudson City Bancorp , AIG and Bank of America are down more than 40 percent this year, while Akamai Technologies , F5 Networks , Juniper Networks and Tellabs have plunged more than 44 percent.
On the other hand, some large-cap stocks from a variety of sectors are posting big gains this year, supported by fat profit margins and increasing revenue growth. The 10 best-performing constituents of the S&P 500 are presented on the following pages, ranked by total return through the first eight months of the year.
5. Chipotle Mexican Grill
Company Profile: Chipotle Mexican Grill operates fast-casual Mexican food restaurants in 35 states throughout the U.S.
2011 Total Return: 36 percent
Current Share Price: $289.24 (Aug. 25)
Shares of Chipotle have pulled back from the stock's record high of $337 set in July. Last month, Chipotle missed Wall Street's profit expectations for its latest quarter because of higher costs. Operating margins shrank due to higher food costs, the company said.
Even so, analysts expect Chipotle to rebound to an average price of $333, which would be an increase of 11 percent from current levels. Ten research firms following the stock, including Morgan Keegan and R.W. Baird, rate the stock a "buy." Another 14 say investors should hold shares, while two firms suggest dumping Chipotle stock.
Company Profile: Lorillard makes cigarettes and tobacco in the U.S., marketed under the brand names of Newport, Kent, True, Maverick and Old Gold.
2011 Total Return: 36.7 percent
Current Share Price: $109.11 (Aug. 25)
Lorillard garners eight "buy" ratings and four "hold" ratings from analysts. Goldman Sachs is among the most bullish with a $123 price target, and Deutsche Bank is among the most skeptical with a price target of $103. The comes after Lorillard beat quarterly profit and sales expectations on improved cigarette volume and higher selling prices.
Lorillard made headlines as it was one of a group of tobacco makers suing the U.S. Food and Drug Administration, alleging that new graphic labeling rules are unconstitutional. Lorillard said requiring cigarette makers to display one of the nine new warning labels on each package is "an unconstitutional way of forcing tobacco manufacturers to disseminate the government's anti-smoking message."
Company Profile: MasterCard services and supports credit, debit and related payment programs to financial institutions.
2011 Total Return: 44.3 percent
Current Share Price: $322.86 (Aug. 25)
Shares of MasterCard have been gaining ground all year, but they really took off earlier this month after the company reported second-quarter results. Earnings were up 33 percent as revenue jumped 22 percent. Even the big investors are piling into MasterCard: During the second quarter, billionaire investor Warren Buffett doubled his stake in the card processor.
MasterCard is a darling among analysts, garnering a whopping 27 "buy" ratings from firms like Wells Fargo, Sterne Agee and RBC Capital. Another seven analysts have a "hold" rating on the stock, while one lone research firm says investors should sell the stock. Even after the rally this year, analysts expect the stock to rise 10 percent to an average price target of $360.74, according to a survey by Bloomberg.
2. National Semiconductor
Company Profile: National Semiconductor designs and manufactures a range of semiconductor products, most of which are analog and mixed-signal integrated circuits.
2011 Total Return: 81.5 percent
Current Share Price: $24.80 (Aug. 25)
While many technology stocks have languished this year, National Semi has bucked the trend to be the second-best performer among all stocks in the S&P 500. The strong performance has little to do with how well National Semi is performing operationally. In April, Texas Instruments announced a deal to acquire the company for $25 a share in an all-cash transaction of about $6.5 billion.
For that reason, most analysts who still cover National Semi rate the stock "hold" with an average price target of $25. The deal is expected to close sometime later this year, according to the companies.
1. Cabot Oil & Gas
Company Profile: Cabot Oil & Gas produces and stores natural gas for resale. The company is involved in the Marcellus shale project.
2011 Total Return: 84 percent
Current Share Price: $69.50 (Aug. 25)
Oil prices have dropped as growth forecasts have been pared back, but Cabot should still see longer-term demand for natural gas. Unlike oil, natural gas is in abundance in the U.S. The company has been performing well, with revenue up 20 percent in the second quarter. Cabot also reported a doubling of profits.
Even with this dominant performance in 2011 thus far, 12 analysts covering Cabot rate the stock "buy," including analysts at Brean Murray and Canaccord Genuity. Another eight research firms say investors should hold on to shares. Only one researcher has a "sell" rating on Cabot shares. The average price target of $93 suggests upside potential of more than 30 percent.
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