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Dec. 5, 2020, 3:42 p.m. EST

These 30 companies have increased sales and boosted margins the most during the pandemic

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By Philip van Doorn

During this pandemic year, many companies have suffered jolts to their business. Some have recovered quickly, while others are still reeling.

So this is a good time to look at the broader stock market, review valuation metrics and identify companies that have displayed strength. These might turn out to be excellent performers when the economy returns to a growth path.

Below is a list of 30 companies that have increased sales and operating profit margins this year. Both are impressive achievements during a pandemic.

Let’s begin with the S&P 500 /zigman2/quotes/210599714/realtime SPX -0.30% . The index has returned 15.5% this year through Dec. 2. This may be a surprise: It has performed better in 2000 than its three-year average annual return of 13.7%, its five-year average of 14.3% and its 10-year average of 14%.

But the benchmark index is weighted by market capitalization. The largest components of the S&P 500 make up 24% of the index’s market cap. Look how well they have performed this year:

Another surprise may be that 190 of the S&P 500 stocks were down for 2020 through Dec. 2, even with dividends reinvested.

Among the S&P 500, 282 companies suffered declines in revenue during the first three calendar quarters of 2020 from the year-earlier period.

So what about this year’s poor performers and possible bounceback plays? If you expect the U.S. economy to catch fire once vaccines are widely deployed and people can return to a semblance of normal social behavior, then the energy sector is an obvious play.

MarketWatch’s Michael Brush expects energy stocks to rise by 60% over the next year. Lewis Altfest, CEO of Altfest Personal Wealth Management, selected three stocks and an ETF to play the expected energy recovery.

Some companies have managed to increase sales this year, while also improving their operating margins — that is, their earnings before interest, taxes, depreciation and amortization (EBITDA), divided by sales.

EBITDA isn’t used for banks or insurers, which have their own measures of profitability, so the financial sector of the S&P 500 is excluded from this stock screen, as are managed health-care companies.

Among the remaining 429 companies, 118 increased sales and sales per share during the first three calendar quarters of 2020 from the first three calendar quarters of 2019, while also improving their operating margins.

Here are the 30 companies among those 118 that increased sales the most:

Scroll the table to see all the data.

We screened for sales per share, in addition to revenue, because a company may have issued new shares to pay for an acquisition that led to a large increase in sales, or simply to raise cash. Here are three examples from the list:

A company may also have its sales per share increase more than revenue, if buybacks have reduced its net share count. Among companies listed above, this happened for Tractor Supply Co. /zigman2/quotes/202009274/composite TSCO +0.28% , Alexion Pharmaceuticals Inc. /zigman2/quotes/206262068/composite ALXN +1.18% , Lowe’s Cos. /zigman2/quotes/205563664/composite LOW +0.03% , Lam Research Corp. /zigman2/quotes/208077897/composite LRCX -0.06% , Clorox Co. /zigman2/quotes/206443229/composite CLX +2.61% , PayPal Holdings Inc. /zigman2/quotes/208054269/composite PYPL +1.35% , Applied Materials Inc. /zigman2/quotes/209393259/composite AMAT -1.52% , Dollar General Corp. /zigman2/quotes/200691429/composite DG -0.73% , Fortinet Inc. /zigman2/quotes/205733290/composite FTNT +0.98% , Target Corp. /zigman2/quotes/207799045/composite TGT +0.33% and Pool Corp. /zigman2/quotes/200443753/composite POOL +0.71% .

Those examples show that any stock screen has it flaws. But there is something to be said for increasing sales and operating profit margins during a pandemic.

If you see any stocks of interest here, you need to do your own research to form your own opinion about a company’s ability to remain competitive for the next decade.

One company that didn’t make the list was Tesla Inc. /zigman2/quotes/203558040/composite TSLA +0.20% , even though its revenue for the first three quarters of 2020 increased 21% from a year earlier, while its sales per share were up 3% and its operating margin improved to 15.02% from 7.62%. Tesla is excluded from the screen because it isn’t included among the S&P 500. It will be added to the index on Dec. 21.

Here’s a summary of opinion among sell-side analysts polled by FactSet, for the same group of companies, sorted in the same order as above:

Getting back to the five largest companies in the S&P 500: You might be curious to see the same set of numbers for sales growth and operating profit margins. Here they are:

All of them increased revenue during the first three calendar quarters of 2020. However, only Microsoft improved its operating margin.

Here’s a summary of analyst opinion for the big five:

Don’t miss: 20 electric vehicle stocks besides Tesla and Nio that analysts expect to rise the most over the next year

/zigman2/quotes/210599714/realtime
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3,841.47
-11.60 -0.30%
Volume: 2.29B
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/zigman2/quotes/202009274/composite
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$ 155.62
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1.03%
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/zigman2/quotes/206262068/composite
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$ 159.73
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N/A
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/zigman2/quotes/205563664/composite
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$ 172.40
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1.39%
Market Cap
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/zigman2/quotes/208077897/composite
US : U.S.: Nasdaq
$ 563.85
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0.92%
Market Cap
$81.20 billion
Rev. per Employee
$888,552
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/zigman2/quotes/206443229/composite
US : U.S.: NYSE
$ 202.35
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P/E Ratio
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2.19%
Market Cap
$25.51 billion
Rev. per Employee
$763,750
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/zigman2/quotes/208054269/composite
US : U.S.: Nasdaq
$ 252.00
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P/E Ratio
95.16
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N/A
Market Cap
$295.27 billion
Rev. per Employee
$755,776
loading...
/zigman2/quotes/209393259/composite
US : U.S.: Nasdaq
$ 106.33
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27.12
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0.83%
Market Cap
$97.22 billion
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$716,667
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/zigman2/quotes/200691429/composite
US : U.S.: NYSE
$ 206.21
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P/E Ratio
20.43
Dividend Yield
0.70%
Market Cap
$50.52 billion
Rev. per Employee
$194,084
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/zigman2/quotes/205733290/composite
US : U.S.: Nasdaq
$ 151.23
+1.47 +0.98%
Volume: 806,642
Jan. 22, 2021 4:00p
P/E Ratio
56.48
Dividend Yield
N/A
Market Cap
$24.55 billion
Rev. per Employee
$304,462
loading...
/zigman2/quotes/207799045/composite
US : U.S.: NYSE
$ 191.91
+0.64 +0.33%
Volume: 3.26M
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P/E Ratio
25.43
Dividend Yield
1.42%
Market Cap
$96.10 billion
Rev. per Employee
$212,261
loading...
/zigman2/quotes/200443753/composite
US : U.S.: Nasdaq
$ 369.31
+2.60 +0.71%
Volume: 233,542
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P/E Ratio
46.27
Dividend Yield
0.63%
Market Cap
$14.83 billion
Rev. per Employee
$711,004
loading...
/zigman2/quotes/203558040/composite
US : U.S.: Nasdaq
$ 846.64
+1.65 +0.20%
Volume: 20.07M
Jan. 22, 2021 4:00p
P/E Ratio
1,692
Dividend Yield
N/A
Market Cap
$802.53 billion
Rev. per Employee
$511,871
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