The S&P’s Most Dramatic Performances of 2013 (And What They Taught Us)

by Daniel Putnam | January 3, 2014 11:59 am

While using performance lists to generate investment ideas for 2014 can be a dicey prospect — as those who invested in gold miners and coal stocks after their poor 2012 can attest — it still can provide a starting point for identifying stocks that may be over- or undervalued.

Finding meaningful data on the best and worst performers in the S&P 500 Index for a given year can be a challenging task. With that in mind, the tables below present sector performance as well as the most notable winners and losers in the index during 2013.

2013 S&P 500 Sector Performance

Sector 2013 Total Return
S&P 500 Index 32.40%
Consumer Discretionary 43.11%
Healthcare 41.39%
Industrials 40.68%
Financials 35.61%
Information Technology 28.49%
Consumer Staples 26.14%
Materials 25.78%
Energy 25.06%
Utilities 13.21%
Telecommunications Services 11.47%

These results should come as no surprise to anyone who kept an eye on the markets in 2013. The three sectors known for stable earnings and high dividends — staples (XLP[1]), utilities (XLU[2]) and telecommunications (IYZ[3]) — all lagged in the environment of rising bond yields, improving growth, and investors’ hearty appetite for risk. At the same time, materials (XLB[4]) and energy (XLE[5]) — each of which were exposed to the weakness in commodity prices — delivered excellent total returns but nonetheless failed to keep pace with the broader market.

On the other side of the equation, the most economically sensitive sectors — industrials (XLI[6]), consumer discretionary (XLY[7]), and financials (XLF[8]) — all finished ahead of the broader market. The outperformance of healthcare stocks (XLV[9]) might seem counterintuitive given the preference for more aggressive, cyclical sectors, until a look under the surface shows that the strong rains of biotechnology stocks more than offset the softer performance of pharmaceuticals.

Top 20 S&P 500 Stocks of 2013

Stock Ticker 2013 Total Return
Netflix NFLX 297.63%
Best Buy BBY 244.21%
Micron Technology MU 243.06%
T-Mobile US TMUS 152.17%
Delta Air Lines DAL 132.59%
Pitney Bowes PBI 132.00%
E*Trade Financial ETFC 119.44%
Celgene CELG 115.33%
Boston Scientific BSX 109.77%
Genworth Financial GNW 106.79%
Facebook FB 105.30%
Gilead Sciences GILD 104.49%
Yahoo! YHOO 103.22%
GameStop GME 102.49%
Lincoln National LNC 102.16%
Hewlett-Packard HPQ 101.11%
Western Digital WDC 100.80%
Constellation Brands STZ 98.87%
Sealed Air SEE 98.37%
TripAdvisor TRIP 97.59%

One notable aspect of the list of 2013 winners is that many were among the worst performers of 2012. Even as the S&P gained over 15%, Best Buy (BBY[10]) and Hewlett-Packard (HPQ[11]) each lost over 40%, while Pitney Bowes (PBI[12]) fell 36%, and Micron (MU[13]), GameStop (GME[14]), E*TRADE (ETFC[15]) and Yahoo! (YHOO[16]) were essentially left for dead at various points during the year. Easy monetary policy and improving economic growth clearly put investors in a forgiving mood during 2013.

Bottom 20 S&P 500 Stocks of 2013

Stock Ticker 2013 Total Return
JCPenney JCP -53.58%
Newmont Mining NEM -48.51%
Cliffs Natural Resources CLF -30.37%
Abercrombie & Fitch ANF -30.04%
Edwards Lifesciences EW -27.07%
Teradata TDC -26.50%
Peabody Energy BTU -25.34%
Intuitive Surgical ISRG -21.68%
FirstEnergy FE -16.53%
HCP HCP -15.78%
Mosaic MOS -14.91%
CenturyLink CTL -13.17%
ADT ADT -11.94%
Diamond Offshore DO -11.85%
AvalonBay Communities AVB -9.84%
Broadcom BRCM -9.40%
Health Care REIT HCN -8.42%
Jabil Circuit JBL -8.18%
Newfield Exploration NFX -8.03%
Ventas VTR -7.64%

Are any of these losers poised to be the Hewlett-Packard of 2014?

All of these names are inherently risky given that they managed to lose ground even as the broader market posted its best return since 1997. But for those in the market for a potential lottery ticket, Newmont Mining (NEM[17]) might be an interesting as spring approaches. The stock’s 49% loss in 2013 comes on the heels of a 20% downturn in 2012, which puts it nearly $50 below its high of $72 and change in December 2011. With 2013 earnings estimates on the upswing, the risk-reward profile has become more favorable. Look for a chance to buy this name for a recovery if gold washes out below the bottom it established in June.

The 20 Largest S&P 500 Stocks, 2013 Total Returns

Stock Ticker 2013 Total Return
Apple AAPL 8.06%
Exxon Mobil XOM 20.14%
General Electric GE 37.89%
Microsoft MSFT 44.28%
Johnson & Johnson JNJ 34.62%
Google GOOG 58.43%
Chevron CVX 19.32%
Procter & Gamble PG 23.69%
International Business Machines IBM -0.18%
Pfizer PFE 26.22%
Berkshire Hathaway BRK.B 32.17%
JP Morgan Chase JPM 36.71%
Wells Fargo WFC 36.71%
AT&T T 9.76%
Coca-Cola KO 17.23%
Phillip Morris International PM 8.50%
Citigroup C 31.84%
Bank of America BAC 34.51%
Verizon Communications VZ 18.64%
Merck MRK 26.80%
Bold text indicates outperformance

Aside from the loss for IBM (IBM[18]), one of the most interesting aspects of this list is the impact of Apple. As strong as the returns were for the S&P 500 Index in 2013, they could have been even better if Apple (AAPL[19]) had kept pace with the market. Since Apple is such a large weighting in the index — 3% on average in 2013 — a return equal to the 32.4% gain of the S&P 500 would have tacked another 0.74 percentage points onto the index return. Granted, this would have required buying that might have drawn interest away from other stocks in the index.

Still, it helps indicate that the “Apple effect” on index performance remains alive and well as we enter 2014.

As of this writing, Daniel Putnam did not hold a position in any of the aforementioned securities.

Endnotes:
  1. XLP: http://studio-5.financialcontent.com/investplace/quote?Symbol=XLP
  2. XLU: http://studio-5.financialcontent.com/investplace/quote?Symbol=XLU
  3. IYZ: http://studio-5.financialcontent.com/investplace/quote?Symbol=IYZ
  4. XLB: http://studio-5.financialcontent.com/investplace/quote?Symbol=XLB
  5. XLE: http://studio-5.financialcontent.com/investplace/quote?Symbol=XLE
  6. XLI: http://studio-5.financialcontent.com/investplace/quote?Symbol=XLI
  7. XLY: http://studio-5.financialcontent.com/investplace/quote?Symbol=XLY
  8. XLF: http://studio-5.financialcontent.com/investplace/quote?Symbol=XLF
  9. XLV: http://studio-5.financialcontent.com/investplace/quote?Symbol=XLV
  10. BBY: http://studio-5.financialcontent.com/investplace/quote?Symbol=BBY
  11. HPQ: http://studio-5.financialcontent.com/investplace/quote?Symbol=HPQ
  12. PBI: http://studio-5.financialcontent.com/investplace/quote?Symbol=PBI
  13. MU: http://studio-5.financialcontent.com/investplace/quote?Symbol=MU
  14. GME: http://studio-5.financialcontent.com/investplace/quote?Symbol=GME
  15. ETFC: http://studio-5.financialcontent.com/investplace/quote?Symbol=ETFC
  16. YHOO: http://studio-5.financialcontent.com/investplace/quote?Symbol=YHOO
  17. NEM: http://studio-5.financialcontent.com/investplace/quote?Symbol=NEM
  18. IBM: http://studio-5.financialcontent.com/investplace/quote?Symbol=IBM
  19. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL

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