CNBC Stock Blog

Best-Performing S&P 500 Stocks Heading Into 2012

Frank Byrt|Analyst

The two biggest gainers in the benchmark S&P 500 Index this year are in the oil and natural gas industry. Political instability among Middle Eastern oil countries and new drilling sites and technologies here at home are raising the prospects for growth.

The top 10 performers had a 42 percent or better increase through Nov. 22, which has meant some backsliding and shuffling over the past few months, at least among the leaders. Oil and gas firms have been well-represented among the top performers in what has been a record year for volatility, which tends to sap returns.

The balance of the performance leaders are an eclectic group, with industries ranging from a robotic surgical device maker to a Mexican fast-food chain. Looking further down the list of big stock gainers this year, no discernable patterns emerge in terms of sector performance.

The S&P 500 , which tracks the performance of the largest U.S. stocks, is down 3.8 percent this year, but is hanging on to a gain of 1.2 percent over the past 12 months as it staggers to a close for 2012.

This year, companies in the S&P 500 have been faced with uncertainties ranging from fast-rising oil and commodities prices in the U.S. earlier in the year, to the continuing saga of the European debt crisis, which have all contributed to investor flight from volatile markets.

That's why a break-even year would sound pretty good to a lot of investors right now.

Howard Silverblatt, a senior index analyst at Standard & Poor's, said the diversity among the top performers shows the importance of finding companies with good management when it comes to stock-picking.

"Over the past two years, companies have reacted differently to the (changing economic) environment, even companies within the same sub-industry, but now these companies stand out," he said. "They've been able to differentiate themselves because of the ways they reacted," but they've also gotten a push by catching on at the right time in an industry cycle.

Among the top performers are such disparate stocks as women's beauty-products seller Estee Lauder, up 37 percent; discount retailer Ross Stores , up 36 percent; aerospace components maker Goodrich , up 40 percent; and coffee-shop chain Starbucks, up 32 percent.

The best-performing sector, of the 10 tracked by S&P, is utilities, up 7 percent. It's always been considered a plodder but is now thought to be attractive because of the high dividend yields found there, which makes it a refuge for investors burned out by the volatility elsewhere.

The next-best performance is by the consumer-staples sector, up 3.8 percent, followed by health care, up 2.2 percent.

All other sectors are losers, with financials leading the decline, at 24.5 percent.

The following is a snapshot of the 5 top-performing stocks in the S&P 500 this year, ranked by total return through Nov. 22:

5. MasterCard, up 58 percent this year to $349, has a market value of $44 billion. It is benefitting from the rapid growth of its debit card business, as financial industry clients are increasingly turning to the company to process card transactions.

Analysts give its shares 19 "strong buy" ratings, four "moderate buys" and six "holds," according to TheStreet Ratings.

4. Intuitive Surgical makes the da Vinci robotic surgical systems, EndoWrist instruments and surgical accessories. It has seen its shares rise 62 percent this year to a whopping $418, giving it a market value of $16 billion.

Analysts give its shares five "strong buy" ratings and eight "holds," according to TheStreet Ratings.

3. Biogen Idec has risen 70 percent this year to $110, and recently topped $120. With a market value of $27 billion, the company is a major drug research and manufacturing firm. Its portfolio includes two market-leading drugs and the potential for a third. Biogen's core franchise has been in autoimmune disorder drugs, principally Avonex, which was approved by the FDA in 1996 to treat multiple sclerosis (MS).

Recent approval of a five-year marketing plan for the MS drug Tysabri in Europe and a positive study for Avonex have impressed Biogen's investors.

Analysts give its shares 11 "strong buy" ratings, two "moderate buys" and seven "holds," according to TheStreet Ratings.

2. El Paso, an interstate gas pipeline operator and oil and gas producer, has seen its shares gain 81 percent this year to $25. It recently completed a big merger that gives it a dominant industry position, a move that has attracted lots of new investors.

Analysts give its shares four "strong buy" ratings, one "moderate buy," and four "holds," according to TheStreet Ratings.

1. Cabot Oil & Gas, an independent oil and gas producer, has gained 112 percent this year to $77. It was recently helped by analysts' increased production projections for 2012, while Brean Murray Carret & Co. analysts said in a recent note to clients that their price target of $98 appears to be conservative, based partly on the $8 billion market-cap company's lower projected well costs in 2012.

Analysts give its shares nine "strong buy" ratings, two "moderate buy" and six "holds," according to TheStreet Ratings.


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