March 11 marked the one-year anniversary of the World Health Organization officially declaring Covid-19 a pandemic. The world has been through a heartbreaking year, and even though recovery is on the horizon with vaccine rollouts, the virus is still spreading and governments are attempting a difficult balancing act between people's safety and their ability to make a living.
For the U.S. stock market, the official declaration of the pandemic came right in the middle of the month-long crash that lasted from Feb. 19 through March 23 of 2020. Stocks have been on a wild and unpredictable ride; the initial price collapse was exacerbated by automatically triggered selling in massive pension funds, and then the market quickly entered a strong bull run despite deep and widespread economic pain due to factors such as "pandemic stocks," investors' anticipation of eventual recovery and the support of the Federal Reserve.
Reviewing the past year, some trends that investors anticipated did indeed show up, such as big tech recovering quickly from pandemic lows. Most others, such as energy and travel, were either a hit or a miss depending on the company.
In light of the above, let's take a look at which stocks in the S&P 500 have seen their prices increase the most year over year since their pandemic lows last March. Due to Fed support, strong bullish sentiment and index buying, almost all the names listed on the index have seen stellar year-over-year gains, but you might fight the top performers a surprise.
The top 10
Below is a chart of the top 10 performers in the S&P 500 year over year through March 11. Stocks that were added to or removed from the index any time during the period in question were excluded, as these changes had effects on their stock prices that artificially skew the data.
SVB Financial Group
United Rentals Inc.
L Brands Inc.
The Mosaic Co.
Devon Energy Corp
Diamondback Energy Inc.
Marathon Oil Corp.
As we can see, there are quite a few energy sector names on this list, particularly oil and gas companies such as Devon Energy (DVN, Financial) and Marathon Oil (MRO, Financial). Positions in these companies mostly continued to suffer even after stock prices began rebounding earlier in 2020, but have paid off more recently now that demand for oil is increasing again and major producers such as OPEC have agreed to price cuts to reduce the global oversupply.
Coming in at number one on the list is ViacomCBS (VIAC, Financial), a media company that re-merged its assets in 2019 after previously having undergone a split. The main reason behind the media company's stock surge is its plans for its streaming service, Paramount+, which debuted earlier in March. The increase in analyst outlooks for the stock in response to this has also helped push the price higher, as has the fact that the stock is heavily shorted according to some analysts.
The number two spot goes to Arizona-based mining giant Freeport-McMoRan (FCX, Financial), with high-tech commercial banking company SVB Financial Group (SIVB, Financial) at number three. Freeport-McMoRan is expected to benefit from increased demand for its mining products as economies around the world recover from the pandemic, while SVB Financial could see profits increase on high activity in the tech sector and an eventual rise in interest rates.
One important thing to note is that many of the stocks listed above have a high number of short sellers. While this may have caused some to target them for short squeezes, this is far from the full story, as they all have company-specific and macro factors working in their favor as well as bullish estimates from Wall Street. When a stock rises rapidly – regardless of the reason – short sellers who don't cover their positions (or who change their minds on the positions) will be squeezed out.
What about Amazon?
Many investors may have expected to see the biggest names on the index such as Amazon.com Inc. (AMZN, Financial) at the top of the list. However, this fails to take into account the fact that many holders of such popular names were unwilling to part with their shares even when Covid-19 hit. In fact, those who were confident in the long-term value of the stock often took the opportunity to add to their holdings as they could.
There is typically a trade-off between risk and reward in investments. The higher risk a company seems to have of failing or producing underwhelming results in the future, the fewer investors there are that would be willing to get in at rock-bottom prices. The perception of a company's chances of failure can become skewed during periods of economic crisis. There is also the chance that some companies really would have failed without government aid or historically low interest rates that allow for historically high debt to be maintained, which investors could not have been sure would happen a year ago.
Year over year, Amazon has gained approximately 82%. Meanwhile, Apple (AAPL, Financial) is up 93%, Facebook (FB, Financial) has appreciated 71%, Alphabet (GOOGL)(GOOG, Financial) gained 84%, Microsoft (MSFT, Financial) rose 67% and Netflix (NFLX, Financial) is up 60%.
Some stocks were excluded from this analysis due to the fact that they were only added to the S&P 500 during the past year. Also, their additions to the index during the period in question increased their share price gains, as index funds had no choice but to buy them and their inclusion to the popular index increased bullish sentiment and analyst coverage on them.
The excluded stocks notably include popular electric vehicle maker Tesla Inc. (TSLA), which has gained 495% year over year. This would have made it number one on this list, but it was only added to the S&P 500 on Dec. 21. Otis Worldwide Corp. (OTIS), Carrier Global Corp. (CARR) and Enphase Energy Inc. (ENPH) were excluded for the same reason.
Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Investors should always conduct their own careful research and/or consult registered investment advisors before taking action in the stock market.
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