A look at the best performers in the flagship S&P 500 Index paints a pretty clear picture: A lot of the picks that were left by the wayside in the last year or two have come roaring back on renewed optimism.
Of course, whether those gains stick and continue in the second half is anyone’s guess. It’s likely that many of these winners might not have much momentum to speak of after the volatility of the summer shakes things up on Wall Street.
But still, it’s worth taking a look through at the biggest winners of the year as a way to explain which sectors were in favor and why — and perhaps find a way to think about which stocks are going to be in favor going forward.
Here are the best 10 stocks in the S&P 500, based on performance from January 1 through Wednesday, June 26.
Many investors should be familiar with the CME Group (CME) brand simply through regular trading. The company is behind the Chicago Mercantile Exchange that specializes in futures and commodities, and now owns the Dow Jones Indices after a big acquisition a few years ago.
Thanks to the high barrier of entry to any competitors establishing their own futures exchange and passing muster with regulators, CME is very entrenched — especially after the recent BATS disaster in spring 2012.
As economic activity mildly improves and investors start to get “risk on,” activity will heat up on the CME and so will profits for the company. At least, that’s the logic behind the big run-up in 2013 for CME stock.
While many picks on this list of Top 10 stocks are tech laggards that put on a good show recently, Life Technologies (LIFE) stands out. LIFE is an industrial and life sciences company focused on food- and water-safety testing among other things, and it doesn’t share a heck of a lot with the other players
But it’s easy to see why many like this innovative player. It helps with DNA and RNA analysis tools for a wide range of applications and provides products and services in such cutting edge fields as stem cell research and cloning.
This is clearly not some boring consumer products company, and Wall Street has taken notice. Shares have soared 50% so far in 2013 thanks to consistent growth and big long-term potential in the eyes of investors.
H&R Block (HRB) is a hard stock to get a read on. It’s a highly seasonal business, doing the lion’s share of its revenue around the April tax deadline each year. It is also a highly cyclical business, because fewer people with jobs means fewer people with any income to pay taxes on.
But it just so happened that the last several months conspired to benefit HRB: Mild but continued improvement in the jobs market, some recovery in housing leading to more potential write-offs for homeowners and sadly the complicated tax shenanigans on Capitol Hill amid the “fiscal cliff” kerfuffle.
Many more folks were confused about how to file in April, and that led to brisk business for H&R Block.
Whether or not that sticks, however, is hard to read since there is so much time between now and next tax season.