2021 was an incredibly interesting year, particularly when it came to the best-performing stocks. That’s as high-growth stocks were annihilated. Above all, though, the S&P 500, Nasdaq Composite and Dow Jones Industrial Average came into 2022 at or near their highs.
But due to the underperformance of our typical winners — heck, even FAANG was mostly unimpressive this year — the best-performing stocks from last year are not what we would have typically assumed.
Granted, to some degree we have to expect the big moves to come from unexpected stocks. That said, we’re talking about the S&P 500 here. It’s not exactly made up of obscure micro-cap holdings.
Nonetheless, enough with the blabbering. Here are the 10 best-performing stocks of 2021.
- Devon Energy (NYSE:DVN)
- Marathon Oil (NYSE:MRO)
- Moderna (NASDAQ:MRNA)
- Fortinet (NASDAQ:FTNT)
- Signature Bank (NASDAQ:SBNY)
- Ford (NYSE:F)
- Bath & Body Works Inc (NYSE:BBWI)
- Diamondback Energy (NASDAQ:FANG)
- Nvidia (NASDAQ:NVDA)
- Nucor (NYSE:NUE)
Now, let’s dive in and take a closer look at each one.
Best-Performing Stocks of 2021: Devon Energy (DVN)
2021 Return: 196.1%
Many of the best-performing stocks are clumped together, even up here in the top 10. However, Devon Energy is certainly an exception to that observation and one heck of an outlier.
The stock was just a few percentage points from seeing its price triple on the year. Energy stocks carved out a fine position atop the leaderboard (about 30%) and had that measure gone through the first few days of 2022, energy would dominate nearly the entire list!
The question investors now have is, can Devon Energy repeat?
It’s unlikely to do so as the top-performing stock in the S&P 500. And heck, even finishing on next year’s top-10 gallery is going to be difficult. But that doesn’t mean the stock can’t have a great year.
Devon weighs in with a $34 billion market capitalization currently and has rallied in an incredible 14 out of the last 15 months. Amid that stretch, the stock has hit multi-year highs, but it still remains well below its all-time highs.
In fact, the stock spent about 10 years north of $50 — a level it’s currently at — and climbed north of $125 at one point.
Marathon Oil (MRO)
2021 Return: 149.7%
It’s not a triple like Devon, but not many investors are going to scoff at a one-year return of just under 150%. Weighing in with a market cap of just $14.6 billion, Marathon Oil is the smallest company on our list of best-performing stocks.
But its market cap could continue to grow if the energy market has anything to say about it.
While Marathon continues to chug higher — and is up about 400% from the 2020 low — the stock still remains about 25% below the 2018 high. If we measure from further back, Marathon’s down even more.
Revenue was explosive in 2021, but is only forecast to grow about 9% next year. Despite this, analysts expect roughly 50% earnings growth. Perhaps that will be enough to keep a bid underneath the stock price.
Best-Performing Stocks of 2021: Moderna (MRNA)
2021 Return: 143.1%
Shaking it up a bit and getting away from energy, we have Moderna. The stock exploded higher as the company was able to develop a two-dose vaccination for Covid-19 in late 2020.
Some may be surprised that Moderna made the list of best-performing stocks in the S&P 500 given that it finished the year in a brutal bear market. Shares crumbled lower by almost 50% from the Aug. 10 high through the end of the year.
However, at its high in August, shares of Moderna were up about 2,400% from the start of 2020. So while the pain has been intense for bulls lately, long-term investors need to take into consideration the long-term value this stock has still generated despite the recent pullback.
Moderna is still valued at nearly $100 billion. That type of valuation doesn’t get handed out too easily and it’s because of the work it’s done with the vaccine that has allowed it to bolster its financials.
While the Covid-19 vaccine will likely be a continual driver for its business, let’s see what else the company can come up with down the road.
2021 Return: 142%
When it comes to technology stocks, Fortinet is one to keep an eye on. Why? Because it’s one of the few growth names that ended 2021 on a high note, going out right near all-time highs.
It’s not only that, though. Instead, the company is still churning out solid growth.
Consensus estimates call for 28.6% revenue growth this year and 18.5% growth in 2022. Analysts expect 16.7% earnings growth this year and an acceleration up to 17.6% in 2022.
The stock is expensive based on traditional valuation metrics, but there are not many high-quality growth stocks out there that are profitable and not getting crushed in the selloff.
Down just 13% from its all-time high — and not down 40% to 60% or more like many others — while churning out a 142% gain in 2021 and Fortinet is one to keep an eye on.
Best-Performing Stocks of 2021: Signature Bank (SBNY)
2021 Return: 141.5%
If we only looked at what sectors were doing well from the start of 2022, energy stocks and financials would dominate the list. Instead, we have a bit more diversity with the best-performing stocks from 2021 — although one bank was at least able to make an appearance: Signature Bank.
After racking up a 141.5% gain, this regional bank may not be done. Increasing interest rates may be bad for most stocks, but not financial stocks.
Signature Bank is a regional bank operator, but it’s got plenty of growth to boast. Analysts expect more than 25% revenue growth both this year and next year — which is crazy for a bank. That’s alongside forecasts for 46.5% earnings growth this year and 18% growth in 2022.
With a $22 billion market cap, it’s one of the smaller stocks on the list and it was even smaller 12 months ago. But if the company continues to execute, perhaps this one can continue higher.
2021 Return: 137.5%
Perhaps the most exciting stock on this list, Ford is doing some incredible things with its products and the stock is finally getting some recognition.
It was driving me crazy seeing all of these newcomers to the automotive space bringing new electric vehicle (EV) products to market. Not because I don’t like seeing new companies, but because they were garnering $40 billion to $80 billion valuations with little or no revenue!
Ford generates more than $125 billion in revenue, is profitable and also has its own EV portfolio. Yet, it wasn’t getting enough credit.
The company has already brought to market the Mustang Mach E, but it also has the E-Transit van and the Ford F-150 Lightning coming soon. Regarding the latter, the automaker already stopped taking reservations, as the list topped 200,000.
Ford is upping production and trying to meet all of the demand for the new truck. That’s going to make Ford an EV winner and the market is either going to have to punish the rest of the EV space or finally reward Ford with a higher valuation.
Plus, the company recently reinstated its dividend.
Best-Performing Stocks of 2021: Bath & Body Works Inc (BBWI)
2021 Return: 133.7%
Keeping with the theme of “shaking things up” for this list, there was a surprising retailer that made the top 10. Given its business, it’s no surprise that Bath & Body Works was obliterated during the initial Covid-19 selloff.
Shares were already down considerably from the all-time highs, but then went on to fall almost 70% when lockdowns and restrictions became the norm. From that low to the high in mid-November, shares rallied more than 1,150%. How impressive is that?
Very. But the latest action hasn’t been quite so hot. While Bath & Body Works ended the year higher by more than 130%, 2022 hasn’t been quite so easy.
Shares were down in five of the first six sessions this year, and have suffered a peak-to-trough decline of more than 17%. Is that a warning sign or an opportunity?
Diamondback Energy (FANG)
2021 Return: 127.4%
Energy is by far the best performing sector over the last 12 months, so it should be no surprise that the best-performing stocks are in energy. With its 127.4% gain, Diamondback Energy has had a good year.
The question is whether the company can maintain the consistency, allowing for the stock to continue pushing higher.
Diamondback Energy is an upstream and midstream oil and natural gas company. Like other oil and gas companies on this list, Diamondback had an explosive rebound in demand last year as the world returned to normal. However, the momentum is expected to continue — at least to some degree.
Analysts expect modest revenue growth in 2022 (13.2%), but the earnings growth is the story here. Estimates call for 270% earnings growth this year and another 51% growth in 2022.
Just based on 2021’s results, Diamondback Energy stock trades at just 11 times earnings. Using the estimates for 2022, the stock trades at just seven times earnings.
Best-Performing Stocks of 2021: Nvidia (NVDA)
2021 Return: 125.5%
Not only is Nvidia the largest company on the list, it’s more than six times larger than the next largest! With its $700 billion market cap, no other company on the list even comes in with a $100 billion market cap.
Nvidia has become a beast in the technology space and it’s not all that often that we see a stock this large perform this well.
When the stock dropped below $200 during March 2020 — that’s below $50 after the stock split — it was a steal of a buy. But at the time, there was too much panic for many investors to realize it.
Now the company is riding multiple growth catalysts to higher prices and it’s why, even with its mega market cap, that it was one of the best-performing stocks of 2021.
Those growth catalysts are secular in nature and should continue for many years to come. They include artificial intelligence and machine learning, cloud computing, datacenters, autonomous driving, gaming and graphics, supercomputing, robotics, drones and everyone’s new favorite, the metaverse.
2021 Return: 118.4%
Last but certainly not least, we have Nucor. The company has done incredibly well over the past 12 to 18 months, as demand has come exploding back. While Covid-19 may have disrupted supply chains and threw the supply/demand dynamic out of whack, it is settling back into place.
After a 7.5% gain the first three days of the new year, we’ve seen a quick pullback in the stock to the tune of 7.6%. However, Nucor remains in a pretty solid uptrend, particularly if it can find its footing.
The stock trades at a ridiculously low valuation, trading at five times this year’s earnings. However, analysts expect both revenue and earnings to dip in 2022. Estimates call for a 6% decline in sales and a more than 25% fall in earnings.
While Nucor has the valuation to support the stock — in other words, it’s not overvalued — this double-whammy of growth declines may make it tough for the stock to rally this year.
On the date of publication, Bret Kenwell held a long position in Nvidia. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.