With the end of a contentious first quarter of 2018 now in sight, we can look back and say … things could have been better. What started out so bullishly ended up being a loss. As of the latest look, the S&P 500 is down roughly 1% since the start of the year, after being up as much as 6.5% in late January.
It’s still testing the waters of lower lows as well.
It has not been a disappointing quarter for all stocks though. Several large-cap names have overcome the lethargy to dish out respectable — even impressive — year-to-date gains. They deserve a special mention.
To that end, here’s a rundown of Q1’s best stocks from the S&P 500. Thanks to earnings or a great story or just a little luck, these tickers have managed to do what most stocks haven’t.
Best S&P Stocks: Adobe (ADBE)
It may be one of the market’s best-kept secrets.
Adobe Systems Incorporated (NASDAQ:ADBE), the name behind PDF documents, isn’t just about versatile files anymore. It’s a full-fledged business tool, offering a graphics creation suite that includes the well-known Photoshop, but also a vast array of platforms that allow companies to ultimately drive more revenue from data they already own.
Best of all, it’s pushing towards more subscription-based, cloud-accessed products. The move sets the stage for reliable revenue growth, and Adobe has already proven it. Last quarter’s revenue was up 24% year-over-year, and profits were up 65%. Those numbers are part of a streak that has pushed ADBE stock up 23% just since the end of 2017.
Best S&P Stocks: Hewlett Packard Enterprise (HPE)
Remember Hewlett Packard Enterprise Co (NYSE:HPE)? This was the company a bunch of investors all but wrote off a couple of years ago, convinced it was no longer relevant in a cloud-centric world, with or without its consumer oriented PC arm (which it split with in 2015).
The doubters were wrong.
See, though the enterprise-oriented outfit still has plenty of work to do, it has found its place in the modern era of technology. Hybrid cloud computing, which combines the best of in-house and outsourced data management, is something no other player does quite as well as HPE. Last quarter’s hybrid IT business was up 10% last quarter, and is now the company’s breadwinner.
It’s also the reason HPE stock gained 23% during the first quarter of this year.
Best S&P Stocks: Amazon.com (AMZN)
Next up is Amazon.com, Inc. (NASDAQ:AMZN), which sports a 28% advance since the end of last year.
You know the reason why … more of the same. Although decent profits remain elusive, the company’s march towards world domination is still underway. It has leveraged last year’s acquisition of Whole Foods Market, introduced cashierless convenience stores, expanded the reach of its Prime service and is now doing lots of its own delivery work.
The feather in its cap, though? You guessed it — cloud computing. Amazon Web Services is the smallest operating unit in Amazon’s lineup, but the biggest overall moneymaker for the company.
Best S&P Stocks: Micron Technology (MU)
Just a few months ago, investors were concerned that (once again) computer memory makers like Micron Technology, Inc. (NASDAQ:MU) had geared up to produce far more hardware than was actually needed.
Funny thing though… while NAND and DRAM prices have remained volatile from week to week, the bigger-picture uptrend has remained intact. Through last week, for instance, DRAM/gigabyte prices hit a 12-month high of 97 cents, at the same time shipment growth started to level off rather than continue to slow.
With good reason to not fear the worst, traders have been plowing back into MU stock, sending shares higher to the tune of 32% so far during Q1.
Best S&P Stocks: Red Hat (RHT)
Red Hat Inc (NYSE:RHT) is a name that’s not overly familiar to most investors, primarily because most investors don’t quite understand what it does. But, with a year-to-date gain of 33%, perhaps more investors should take a look.
In short, Red Hat offers (and this shouldn’t come as a surprise) software that makes it easier for organizations to use the digital cloud. In simplest terms, using its know-how, anyone can run any app in any computing environment.
And just for the record, Red Hat aced its fiscal-fourth-quarter numbers, reporting after Monday’s close that Q4’s top line was up 23% year-over-year. Its outlook for the current quarter also models 18% revenue growth, with similar growth expected for the full year.
Best S&P Stocks: Seagate Technology (STX)
Considering Micron Technology shares have done so well over the course of the past quarter, it comes as no real shock that close-cousin Seagate Technology PLC (NASDAQ:STX) has done similarly well, gaining 35% since the end of the last quarter of last year.
Seagate Technology is in a slightly different sliver of the computer and server market. It primarily makes hard disk drives (where your operating system, software and documents are kept) whereas Micron makes the RAM memory that actually does the computing while your device is turned on. The two companies more or less share the same fate though.
And, that’s just fine with STX shareholders. Its fourth quarter, income was up 17% on a year-over-year basis, helping to drive some of this year’s big gain.
Best S&P Stocks: CSRA (CSRA)
CSRA Inc (NYSE:CSRA) is another one of the S&P 500 names that’s easy to forget about, assuming investors knew about it in the first place. On the other hand, becoming familiar with it now may be a moot point.
Why’s that? Because General Dynamics Corporation (NYSE:GD) made a $9.6 billion bid for CSRA in early February, and the fact that it recently upped its bid to fend off another company interested in CSRA speaks volumes about how serious the defense contractor is.
All told, CSRA shares are up 38% year-to-date, with most of that gain being the result of other companies’ acquisition efforts.
Best S&P Stocks: Netflix (NFLX)
There will come a time when Netflix, Inc. (NASDAQ:NFLX) finally hits a wall, unable to add meaningful numbers of new users, and then unable to handle its massive (and ever-increasing) debt load. Investors don’t think that day is coming anytime soon though. NFLX shares have gained 57% since the end of 2017, and still appear to be going strong.
Then again, who can blame them? After growing the top line by 33% last quarter and almost tripling its per-share profits, it’s difficult to imagine this chugging train ever losing steam.
Best S&P Stocks: XL Group (XL)
Like CSRA, insurance outfit XL Group Ltd (NYSE:XL) arguably cheated its way onto the list of 2018’s biggest large-cap winners so far. It was targeted as an acquisition by AXA in early March, which offered $15.3 billion for the outfit.
Still, strictly by the numbers, the 57% gain XL investors have enjoyed just since the end of last year makes it the S&P 500’s second-best performer.
As for the rationale, AXA is looking to mitigate its financial risks by adding insurance risks. Moreover, AXA likes XL Group’s product line, which create “high frequency customer contacts.”
Best S&P Stocks: Fossil Group (FOSL)
Last but not least, Fossil Group Inc (NASDAQ:FOSL) — yes, the watch and accessory outfit — is this year’s biggest and best large-cap winner.
It’s a bit shocking, if only because the so-called retail apocalypse has translated into a headwind for accessory makers as well. Meanwhile, the advent of the smartwatch has left Fossil scrambling for relevancy on that front. Though it has some smartwatches in its lineup, it’s a market that’s been easily dominated by Apple Inc. (NASDAQ:AAPL).
Don’t get too excited just yet. The 60% gain FOSL shares have mustered so far for 2018 was a relatively easy advance in light of the 94% slide FOSL shares suffered between late 2013 and late 2017. Any rebound at all was going to be mathematically exaggerated. Still, for the savvy, lucky few who were willing to wade into Fossil shares in December, it has been a rewarding ride.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.