10 Best-Performing S&P 500 Stocks in the Second Quarter
Frank Byrt
06/27/12 - 08:20 AM EDT
BOSTON (TheStreet) -- The sovereign debt crisis in Europe and the muddled outlook for the economies of the U.S. and China have squelched investor optimism, pushing down the S&P 500 Index by 5% in the second quarter.
That's an abrupt reversal from the first quarter, when the benchmark jumped 12%. On balance for 2012, the S&P 500 is up 6.2%.
Market activity at first blush appears to be relatively democratic, as the gain for this year includes increases in nine of the 10 sectors, with 304 stocks advancing and 195 decreasing.
But the S&P 500's 6.2% increase in 2012 would be only 4.9% if it were not for iPhone and iPad maker Apple's(AAPL) 44% surge. Apple is the index's largest component. That performance appears to have set a record for a company's impact on the index, said Howard Silverblatt, Standard & Poor's senior index analyst.
On a positive note, violent market swings have been few, with only one day up more than 2% and two days down over 2% in the second quarter -- but both of those days were in June, he added.
Financials have been the most volatile sector this year, gaining 22% in the first quarter, then losing 9.2% in the second, resulting in a gain of 10.3% this year.
"Large caps have led markets higher this year and should continue to do so," said Citigroup analyst Tobias Levkovic. The S&P 500's rise this year is ahead of the S&P 600 small-cap index's 4% advance and the S&P 400 mid-cap index's 3% advance.
And the S&P 100 has appreciated more than 6%, as its member companies have benefited from being industry leaders, which give investors more confidence in them. They also offer more generous dividend yields, now approaching 2.4%, which is about a 35% income premium to the 10-year Treasury's yield. Hence, they are attracting more yield-hungry investors.
The top 10 performers on the S&P 500 for the second quarter are in a hodge-podge of industries, ranging from paint company Sherwin Williams(SHW) to heart-valve device maker Edwards Lifesciences Corp.(EW).
The closest thing to a trend is the performance of the two largest online travel booking firms, which have seen tremendous growth in demand. They are Expedia(EXPE) and TripAdvisor(TRIP).
Here are the 10 top-performing S&P stocks in the second quarter in inverse order of their returns in the period:
10. Whole Foods Market(WFM)
Company profile: Whole Foods, with a market value of $18 billion, is the largest U.S. retailer of natural and organic foods with about 300 stores in the U.S., Canada and England.
Investor takeaway: Its shares rose 16% in the second quarter and 39% this year. Last year, sales grew 12.2%, reflecting 8.5% comparable-store sales growth and additional stores. Whole Foods is trying to reach a wider range of customers by increasing its emphasis on less expensive private store brands.
9. Dollar Tree Stores(DLTR)
Company profile: Dollar Tree, with a market value of $12.7 billion, operates more than 4,000 stores that sell a variety of consumable merchandise, including candy and food, general merchandise and seasonal goods -- all for $1.
Investor takeaway: Its shares climbed 16% in the second quarter and 32% this year. The company is projected to post 5.2% same-store sales growth in its current fiscal year, benefitting from increased store traffic as it has added refrigerated foods and other consumable merchandise.
8. eBay(EBAY)
Company profile: eBay, with a market value of $53 billion, is an Internet auction site and a growing e-commerce hub.
Investor takeaway: Its shares increased 16% in the second quarter and 41% this year. Revenue is expected to increase 19% this year and 14% in 2013, according to S&P, aided by acquisitions, including the June deal for GSI Commerce. Its PayPal unit is also growing fast and increasing in value.
7. Cabot Oil & Gas(COG)
Company profile: Cabot, with a market value of $8 billion, is an independent exploration and production company with operations in North American oil fields.
Investor takeaway: Its shares advanced 17% in the second quarter but are down 4% this year. Cabot has outperformed its peers despite declining oil prices since May. Morningstar says Cabot has leveraged its early mover position in the Pennsylvania Marcellus Shale to transform itself into one of the lowest-cost natural gas producers in the industry, and it holds a huge untapped inventory of land.
6. Sherwin-Williams(SHW)
Company profile: Sherwin-Williams, with a market value of $13 billion, makes paints, coatings and related products.
Investor takeaway: Its shares increased 18% in the second quarter and 44% this year. Morningstar forecasts sales growth of 12% this year, "with better pricing and volume driving the majority of the growth." However, slower-than-expected new-home construction may hurt earnings. S&P says the shares are overvalued.
5. Sunoco(SUN)
Company profile: Sunoco, with a market value of $5 billion, is an energy company engaged in the refining of petroleum products and the operation of crude-oil and refined-products pipelines and terminals. On April 30, Energy Transfer Partners(ETP) announced it reached an agreement for the acquisition of Sunoco in a $5.3 billion deal.
Investor takeaway: Its shares jumped 25% in the second quarter and 41% this year. Sunoco had been repositioning its business for the past few years, getting rid of its refineries. The buyout represents a 25% premium to outstanding share prices.
4. TripAdvisor(TRIP)
Company profile: TripAdvisor, with a market value of $6 billion, is a leading online travel media platform, operating in the U.S. and internationally.
Investor takeaway: Its shares surged 28% in the second quarter and 80% this year. First-quarter revenue grew 23% year-over-year, driven by "click-based advertising," which makes up about 80% of sales, and stronger-than-expected hotel shopper traffic and better advertising rates. Morningstar projects 18% revenue growth this year and 10% net income growth.
3. Dean Foods(DF)
Company profile: Dean, with a market value of $3 billion, is the nation's largest processor and distributor of milk and related dairy products, which include more than 50 local and regional brands.
Investor takeaway: Its shares rose 37% in the second quarter and 48% this year. The company achieved significant cost cuts and price hikes in its core dairy business in the period. As a result, it raised its earnings outlook for the second quarter to 28 cents to 33 cents a share, above the 22 cents a share analysts were looking for.
2. Edwards Lifesciences(EW)
Company profile: Edwards, with a market value of $12 billion, manufactures a range of medical devices and equipment for advanced stages of heart disease, including tissue heart valves, surgical clips and catheters.
Investor takeaway: Its shares climbed 40% in the second quarter and 44% this year. The stock got a big boost early in June when the FDA approved its Sapien transcatheter heart valve for wider use. Morningstar says Edwards' efforts to focus on efficiency and higher-margin products have paid off.
1. Expedia(EXPE)
Company profile: Expedia, with a market value of $6 billion, is the world's largest online travel agent, as a provider of booking services for hotel rooms, airline tickets and rental cars. Businesses include Expedia, Hotels.com and Hotwire.
Investor takeaway: Its shares soared 44% in the second quarter and 66% this year, as consumers shop for bargains online. Still, S&P has it rated "sell" because of "maturing market growth and growing competition." Morningstar notes that its international bookings growth is slower than its peers, as Expedia grew by 30% annually since 2007, compared with 53% atPriceline(PCLN).
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