Happy birthday, bull market! Though there is still some uncertainty on Wall Street right now, you have to admit it’s nothing compared to March 9, 2009. The market has gained 60% since that dark day and economic indicators are vastly improved.
There are, of course, many stocks that haven’t gotten back everything they’ve lost. But a look at some of the highest-flying stocks since the market low a year ago shows a story of some dramatic comebacks that may surprise you. Here are the top 5 gainers among the 30 Dow Jones Industrial Average component stocks.
#1. Bank of America (BAC) – up 348%
Technically, we all have a share in the success of Bank of America (BAC). The company received $25 billion in taxpayer bailout money in late 2008 and another $20 billion in January 2009, along with $118 billion in loan guarantees. And according to a March 2009 article in The New York Times, Bank of America received an additional $5.2 billion in government bailout money channeled through the defunct American International Group. BAC put that cash to good use if you’re judging by stock appreciation, but the company’s brutal fourth-quarter loss of $5.2 billion, or $0.60 per share, shows serious problems persist at this bank.
#2. American Express (AXP) – up 285%
Things looked bleak at American Express (AXP) in 2009 as its affluent customer base suffered the same credit woes as the rest of the U.S. The company missed estimates by 65% for the second quarter of 2009 and seemed down and out. But the company then turned on the afterburners, as its third quarter earnings almost doubled and it went on to repay $3.39 billion in TARP funds plus $74.4 million in dividend payments. The company has seen sustained success as its bad debt stats continue to improve. AmEx’s U.S. borrowers at least a month behind their card payments declined modestly, to 3.6% in January from 3.7% in December — better than almost all of its competitors. In addition, AmEx wrote off 7% of its card loans in January, compared to 7.1% in December.
Is American Express one of the Dow’s 10 Top Dividend Stocks?
#3. JP Morgan Chase (JPM) – up 169%
If ever there was a company that exemplified opportunism amid disaster, it’s JP Morgan Chase (JPM). In March 2008, the federal government negotiated the sale of almost-bankrupt Bear Stearns to JPM for a mere pittance — $2 per share. Bear’s 52-week high at the time was over $100 a share! Eventually, JP Morgan upped the ante to ten bucks a share, but still made off with a huge chunk of the market at fire sale pricing. The results have been obvious ever since. Over the last four quarters, JPM has topped earnings expectations by no less than 21% and by as much as 600%. It walked away with $2.7 billion in the second quarter alone due to the consolidation of power in the financial industry and its growing influence in the sector.
#4. Alcoa (AA) – up 158%
The presence of Alcoa (AA) on this list is a bit of a shock to most investors who don’t follow the company’s share price regularly. In the fourth quarter of 2008, AA lost almost a billion dollars. And in the first quarter of 2009, earnings plummeted by more than half as higher raw material and energy costs cut into results. But the aluminum giant’s report in January marked the second profitable quarter in a row (excluding one-time charges) and many investors are betting this industrial giant will start booming once the recovery picks up steam. Citigroup recently upgraded the stock from “Hold” to “Buy” in February after earnings, so it looks like many analysts still think AA has room to improve.
Get a complete outlook and price targets on metal and mining stocks GG, FCX, NUE, X, AA.
#5. Caterpillar (CAT) – up 156%
Another company that’s a bit of a surprise performer since the March 9 lows is Caterpillar (CAT). The company is a construction bellwether, and conventional wisdom tells us that the last year has been brutal for housing and commercial real estate. But CAT maintains a substantial 2.8% dividend that has kept investors happy, and has proven time and time again that its not in as dire straits as the “experts” think. The company has topped earnings estimates for each of the last four quarters, with earnings surprises of 875%, 227%, 966% and 46%. That’s a trend of strength that’s hard to argue with, no matter how many “for sale signs” or vacant storefronts you see in your hometown.
In every issue of OptionsZone Insider, you’ll get access to some of the top options traders in the business, along with their unique strategies and their best trades — start your FREE subscription here.