By Philip van Doorn, MarketWatch
As we head to a new year, predictions for financial markets and stock picks for 2020 are flowing. It’s also time for annual mea culpas, as stock pickers admit their failures — and, of course, brag about their successes.
It’s difficult for a fund manager to beat the broader market, which is a reason why low-cost index funds are so popular. The S&P 500 Index /zigman2/quotes/210599714/realtime SPX +1.60% has returned 30% (with dividends reinvested) through Dec. 16. The benchmark index last performed so well in 2013, when it jumped 32%.
MarketWatch’s Jeff Reeves wrote an entertaining piece about his mixed record for 2019 stock selections, and readers chimed in with their own amusing comments.
How Wall Street’s favorites fared
On Jan. 2, we narrowed the S&P 500, the S&P 400 Mid Cap Index /zigman2/quotes/219506813/composite MID +2.80% and the S&P Small Cap 600 Index /zigman2/quotes/210599868/delayed SML +0.98% to companies covered by at least five sell-side analysts with at least 75% “buy” or equivalent ratings. We then listed the 20 for each index with the highest implied upside for 2019, based on consensus price targets.
A favorite large-cap stock pick for 2019 was Anadarko Petroleum. The stock closed at $43.84 on Dec. 31, 2018, and analysts’ consensus price target for the shares on that date was $76.86. After Anadarko agreed in April to be acquired by Chevron /zigman2/quotes/205871374/composite CVX +0.04% for $65 a share, Occidental Petroleum /zigman2/quotes/207018272/composite OXY -3.95% outbid Chevron to take out Anadarko for $76 a share in August. Activist investor Carl Icahn sent a letter to Occidental’s shareholders criticizing the deal, and Occidental’s management team and board of directors.
The consensus price target wasn’t met, but that $76 takeout price was a 73% premium from Anadarko’s share price on Dec. 31. So this one is in the “win” column for the analysts.
Here are the other 19 large-cap picks for this year, with total returns (which include reinvested dividends) through Dec. 16, 2019:
|Company||Ticker||Industry||Total return - 2019|
|Aptiv PLC||/zigman2/quotes/204162392/composite APTV||Auto Parts: OEM||56%|
|LKQ Corp.||/zigman2/quotes/210317139/composite LKQ||Automotive Aftermarket||51%|
|Allergan plc||Pharmaceuticals: Generic||45%|
|Conagra Brands Inc.||/zigman2/quotes/200394144/composite CAG||Food: Major Diversified||39%|
|Electronic Arts Inc.||/zigman2/quotes/206954087/composite EA||Recreational Products||34%|
|SVB Financial Group||/zigman2/quotes/200548254/composite SIVB||Regional Banks||32%|
|Norwegian Cruise Line Holdings Ltd.||/zigman2/quotes/204183397/composite NCLH||Hotels/Resorts/Cruiselines||30%|
|Alexion Pharmaceuticals Inc.||/zigman2/quotes/206262068/composite ALXN||Biotechnology||14%|
|PVH Corp.||/zigman2/quotes/208313660/composite PVH||Apparel/Footwear||13%|
|Pioneer Natural Resources Co.||/zigman2/quotes/206736173/composite PXD||Oil & Gas Production||10%|
|Marathon Petroleum Corp.||/zigman2/quotes/209634297/composite MPC||Oil Refining/Marketing||7%|
|TechnipFMC Plc||/zigman2/quotes/207530935/composite FTI||Oilfield Services/Equipment||4%|
|Diamondback Energy Inc.||/zigman2/quotes/201200230/composite FANG||Oil & Gas Production||-5%|
|Halliburton Co.||/zigman2/quotes/210488727/composite HAL||Oilfield Services/Equipment||-5%|
|American Airlines Group Inc.||/zigman2/quotes/209207041/composite AAL||Airlines||-12%|
|Albemarle Corp.||/zigman2/quotes/200578017/composite ALB||Chemicals: Specialty||-12%|
|Concho Resources Inc.||/zigman2/quotes/208942254/composite CXO||Oil & Gas Production||-21%|
|Mylan NV||/zigman2/quotes/209413137/composite MYL||Pharmaceuticals: Generic||-31%|
Including Anadarko, eight of the 20 large-cap picks matched or beat the return of the S&P 500 in 2019. So 12 underperformed the index, with six having negative returns. Eleven of the 20 returned at least 10%.
Here’s how the 20 mid-cap picks performed in 2019 through Dec. 16:
|Company||Ticker||Industry||Total return - 2019|
|Marriott Vacations Worldwide Corp.||/zigman2/quotes/200002947/composite VAC||Other Consumer Services||82%|
|Lumentum Holdings Inc.||/zigman2/quotes/204419752/composite LITE||Telecommunications Equipment||80%|
|MKS Instruments Inc.||/zigman2/quotes/208573663/composite MKSI||Electronic Production Equipment||72%|
|MasTec Inc.||/zigman2/quotes/207965492/composite MTZ||Engineering & Construction||52%|
|Knight-Swift Transportation Holdings Inc. Class A||/zigman2/quotes/206974312/composite KNX||Trucking||48%|
|Boyd Gaming Corp.||/zigman2/quotes/206215159/composite BYD||Casinos/Gaming||44%|
|Thor Industries Inc.||/zigman2/quotes/202832948/composite THO||Recreational Products||36%|
|Brunswick Corp.||/zigman2/quotes/207511569/composite BC||Recreational Products||32%|
|HealthEquity Inc.||/zigman2/quotes/210521638/composite HQY||Investment Managers||22%|
|East West Bancorp Inc.||/zigman2/quotes/206183036/composite EWBC||Regional Banks||14%|
|Cabot Corp.||/zigman2/quotes/205436466/composite CBT||Industrial Specialties||13%|
|SLM Corp||/zigman2/quotes/205828282/composite SLM||Finance/Rental/Leasing||9%|
|Apergy Corp.||Oilfield Services/Equipment||8%|
|WPX Energy Inc.||/zigman2/quotes/204372171/composite WPX||Oil & Gas Production||5%|
|Patterson-UTI Energy Inc.||/zigman2/quotes/204120302/composite PTEN||Contract Drilling||0%|
|Allegheny Technologies Inc.||/zigman2/quotes/202946054/composite ATI||Steel||-2%|
|Ligand Pharmaceuticals Inc.||/zigman2/quotes/202030140/composite LGND||Biotechnology||-22%|
|Granite Construction Inc.||/zigman2/quotes/200569846/composite GVA||Engineering & Construction||-29%|
|Callon Petroleum Co.||/zigman2/quotes/201917664/composite CPE||Oil & Gas Production||-32%|
|Inogen Inc.||/zigman2/quotes/208161856/composite INGN||Medical Specialties||-43%|