By Philip van Doorn, MarketWatch
(Updates story with year-end closing prices.)
The pandemic year of 2020 was a surprising one for the stock market as the broad indexes crashed in March, only to roar back as unprecedented stimulus from the federal government and the Federal Reserve drove a tremendous amount of money into equities, even as the economy was reeling.
Below are lists of 2020’s winners among components of the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.39% , S&P 500 /zigman2/quotes/210599714/realtime SPX -1.31% and Nasdaq-100 /zigman2/quotes/210598364/realtime NDX -2.88% indexes.
Honorable mentions, plus Tesla and a warning
Before going to the broad indexes, it’s important to note that many of this year’s highest flyers aren’t part of the S&P 500 or the Nasdaq-100 Index — or at least not yet. For the Nasdaq-100, it takes time to rebalance the index to bring the largest companies in the Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP -2.70% into the smaller subset. Here’s a list of 15 stocks that aren’t yet included in SPX or NDX but soared during 2020.
To gain entry to the S&P 500, a company’s “most recent quarter’s earnings and the sum of its trailing four consecutive quarters’ earnings must be positive” and it must also meet other requirements , according to S&P Global.
Tesla Inc. /zigman2/quotes/203558040/composite TSLA -4.84% met the bill and was added to the S&P 500 on Dec. 21, after the stock had skyrocketed 731% by then. The electric-vehicle maker tops the lists, below, of the year’s S&P 500 and Nasdaq-100 winners.
But Tesla’s addition to the S&P 500 following five quarters of positive earnings has raised what may be a red flag for some investors. In a note to clients on Dec. 24, Jefferies analyst Christopher Wood pointed out that when Tesla was added to the S&P, its market capitalization was greater than the combined stock-market values of Toyota, Volkswagen /zigman2/quotes/206919008/delayed XE:VOW +5.31% /zigman2/quotes/204431732/delayed VWAGY +5.31% , General Motors Co. /zigman2/quotes/205226835/composite GM -2.66% , Ford Motor Co. /zigman2/quotes/208911460/composite F -3.03% , Honda Motor Co. /zigman2/quotes/207173990/composite HMC +1.69% and Nissan Motor Co. /zigman2/quotes/207656007/delayed NSANY +2.61% . Wood added that all those firms were “busy spending serious amounts of money in electric vehicles, lured by various incentives, be they subsides or fines.”
Here’s the kicker: Wood wrote that as far as he could tell, “Tesla only generates profits at present by selling tax credits,” which are payments to Tesla by other auto manufacturers who make too few electric vehicles to satisfy regulators. Wood continued: “So in this respect, as noted in an excellent article in The Wall Street Journal in August, the irony is that Tesla is worth more than most of the industry it relies on for the subsidies that are the only reason it has been able to report five consecutive quarters of profits .” (The italics are mine.)
More on Tesla and credits: Tesla plays smoke and mirrors with profits again
Perhaps surprisingly, none of the high-profile FAANG stocks — Facebook Inc. /zigman2/quotes/205064656/composite FB -1.39% , Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN -2.89% , Apple Inc. /zigman2/quotes/202934861/composite AAPL -2.45% , Netflix Inc. /zigman2/quotes/202353025/composite NFLX -4.95% and Google holding company Alphabet Inc. /zigman2/quotes/202490156/composite GOOGL -2.57% /zigman2/quotes/205453964/composite GOOG -2.37% — made the S&P 500 list of 20 best performers.
However, Amazon and Apple made the list of top 20 Nasdaq-100 performers, and Apple topped the Dow 30 components. Here’s how the other FAANGs performed in 2020:
• Facebook climbed 33%.
• Netflix jumped 67%.