10 stocks that may revisit their highs as the year ends
21 hours 22 minutes ago - DJNF
By Philip van Doorn, MarketWatch
A seasonal pattern suggests winners will gain even more in the weeks ahead
Howard Gold has argued that this holiday season might be a winner for the stock market, and we have prepared a special list of S&P 500 member companies that might lead the charge.
Gold, in his column on Friday, said December has been the strongest month for the Dow Jones Industrial Average (DJI) over the past century, and he also cited the Stock Trader's Almanac when saying, "rocky Octobers are usually followed by strong Novembers and Decembers."
October certainly was rocky, with the S&P 500 (SPX) sliding 6% during the first half of the month before storming back with an 8% gain in the second half, coming close to a record high of 2,018.05 on Oct. 31. It's been clear sailing during November, with the index hitting a new closing high of 2,063.75 on Friday, for a year-to-date total return (with reinvested dividends) of 14%.
The continued flow of positive economic news in the U.S., including the creation of more than 200,000 jobs for nine straight months, has overshadowed weakening economies abroad, and the decline in oil and gasoline prices has put additional cash in consumers' pockets, leading into what could be a lovely season for holiday sales.
Last week's market action was helped by a number of strong reports from retailers, including a surprise profit from Target Corp. (TGT), a 5.4% sales increase for Home Depot Inc. (HD), a 5.6% sales boost for Lowe's Cos. Inc. (LOW), and sales growth of 11% for Dollar Tree Inc. (DLTR).
According to Gold, we might see continued strong market performance until at least the end of the year for "any number of reasons: tax selling of losing stocks, professional managers buying outperforming stocks to window-dress their portfolios, and Christmas and New Year's cheer spilling over to the markets."
With that in mind, we isolated the 175 S&P 500 stocks that have returned at least 20% this year.
This list pares the big group of winners to 10 that have fallen the most from their 52-week highs:
Company Ticker Industry Closing price - Nov. 21 52-week high % pullback from 52-week high Total return - YTD
Windstream Holdings Plc. Specialty Telecommunications $9.95 $13.30 -25% 35%
Gilead Sciences Inc. Biotechnology $100.58 $116.83 -14% 34%
Safeway Inc. Food Retail $34.82 $40.25 -13% 22%
Baker Hughes Inc. Oilfield Services/ Equipment $65.83 $75.64 -13% 20%
Keurig Green Mountain Inc. Specialty Food $140.37 $158.87 -12% 88%
Walgreen Co. Drugstore Chains $67.59 $76.39 -12% 20%
CenturyLink Inc. Specialty Telecommunications $40.47 $45.67 -11% 35%
Universal Health Services Inc. Class B Hospital/ Nursing Management $103.55 $115.64 -10% 28%
Time Warner Inc. Media Conglomerates $80.05 $88.13 -9% 21%
Facebook Inc. Class A Internet Software/ Services $73.75 $81.16 -9% 35%
Total returns assume reinvestment of dividends. Source: FactSet
We have excluded two oil producers, Newfield Exploration Co. (NFX) and EOG Resources Inc. (EOG), from this list, because of the extraordinary pressure in the industry brought about by the oil-price drop. Shares of Newfield Exploration have returned 43% this year through Friday's close, yet the stock is 23% shy of its 52-week high. EOG Resources has returned 22% this year, but the stock is down 14% from its 52-week high.
One oil-related play included in the list is Baker Hughes Inc. (BHI), which last week agreed to be acquired by oil-field-services and equipment rival Halliburton Co. (HAL) for $34.6 billion in cash and stock. That is a fascinating deal, since it faces a regulatory hurdle for approval, and shares of Baker Hughes closed at $65.83 Friday, which is 16% lower than the offer price.
-Philip van Doorn; 415-439-6400; AskNewswires@dowjones.com
Copyright (c) 2014 Dow Jones & Company, Inc.
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