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Philip van Doorn

Jan. 28, 2018, 12:59 p.m. EST

These 27 S&P 500 stocks are blowing away the market with gains of 15% or more this month

Measuring the S&P: 23% of its components are up at least 10% so far in 2018 while 35 are in the red

By Philip van Doorn, MarketWatch

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Netflix shareholders have had quite a party so far in 2018.

One might have thought the stage was set for another excellent year for U.S. stocks after President Trump signed the legislation that reduced the federal corporate income-tax rate to 21% from 35% in December. But you might not have expected the market to move so dramatically.

Netflix is far and away the early leader in the S&P 500’s (S&P:SPX) broad rally this year. The index has returned 6.3% during the first 17 trading sessions of 2018, through Jan. 25, with dividends reinvested, adding to its remarkable return of 21.8% in 2017. (The S&P 500 actually comprises 505 stocks, because several companies have more than one class of common shares included in the index.)

The index has closed at a record 13 times this month, the most records for any calendar month since February 1998.

Read: ‘FOMO’ stock market sees a week of record inflows

And it may be time to put some perspective on every time the Dow Jones Industrial Average (DOW:DJIA) rises by another 1,000 points. After all, a 1,000-point gain from its last milestone of 26,000 on Jan. 17 would be gain of 4%. That’s lovely, but not dramatic. The Dow is up 6.9% this year (and has set 10 record closes), following last year’s return of 21.8%.

Among the S&P’s 505 components:

• 117 have had double-digit total returns.

• 232 have beaten the market with total returns of 6.4% or more.

• 408 have shown positive returns.

• One is flat. That would be Celgene Corp. , which reported better-than-expected fourth-quarter results on Jan. 25 after announcing on Jan. 22 an agreement to acquire Juno Therapeutics Inc. for $9 billion.

• 96 are down.

• 35 are down 5% or more, including five that are down 10% or more.

Sector performance

For 2018, many professional investors expect a healthy environment for the energy sector, because of strong demand for oil brought about by accelerating growth in all major world economies. West Texas Intermediate crude oil (NYM:CL.1)  has risen 8% this year, to $65.51 a barrel as of the close on Jan. 24.

Jim Brilliant, who manages the CM Advisors Fixed Income Fund (NAS:CMFIX)  said in an interview that simultaneous economic growth around the world will signal a “rotation” for stocks away from higher-growth industries into value plays in the industrial, energy and materials sectors.

Here’s how the 11 sectors of the S&P 500 have performed through Jan. 25:

  S&P 500 Sector Total return - YTD Total return - 2017
Consumer Discretionary 9.5% 23.0%
Health Care 8.5% 22.1%
Financials 7.3% 22.2%
Information Technology 7.1% 38.8%
Energy 6.8% -1.0%
Materials 5.6% 23.8%
Industrials 5.3% 21.0%
Consumer Staples 2.6% 13.5%
Telecommunications 0.7% 0.0%
Real Estate -2.6% 10.8%
Utilities -3.1% 12.1%
S&P 500 6.3% 21.8%
Source: FactSet

It may not be a surprise to see the real estate and utilities sectors showing the worst performance so far this year, as investors these income-generating sectors generally decline when interest rates rise. The yield on 10-year U.S. Treasury notes (XTUP:BX:TMUBMUSD10Y)  rose to 2.63% on Jan. 25 from 2.40% at the end of 2017.

Here are the 27 S&P 500 stocks that have returned 15% or more this year through Jan. 25:

Company Ticker Industry Total Return - 2018 Total Return - 2017
Netflix Inc. (NAS:NFLX) Cable/Satellite TV 40% 55%
Seagate Technology PLC (NAS:STX) Computer Peripherals 27% 17%
Intuitive Surgical Inc. (NAS:ISRG) Medical Specialties 23% 73%
Kohl's Corp. (NYS:KSS) Department Stores 23% 16%
Align Technology Inc. (NAS:ALGN) Medical Specialties 23% 131%
Nvida Corp. (NAS:NVDA) Semiconductors 22% 82%
Advance Auto Parts Inc. (NYS:AAP) Specialty Stores 21% -41%
W.W. Grainger Inc. (NYS:GWW) Wholesale Distributors 21% 4%
Cardinal Health Inc. (NYS:CAH) Medical Distributors 21% -13%
Advanced Micro Devices Inc. (NAS:AMD) Semiconductors 21% -9%
ResMed Inc. (NYS:RMD) Medical Specialties 20% 39%
Wynn Resorts Ltd. (NAS:WYNN) Casinos/ Gaming 19% 98%
IDEXX Laboratories Inc. (NAS:IDXX) Medical Specialties 19% 33%
Fluor Corp. (NYS:FLR) Engineering & Construction 19% 0%
Amazon.com Inc. (NAS:AMZN) Internet Retail 18% 56%
Target Corp. (NYS:TGT) Discount Stores 17% -6%
Boeing Co. (NYS:BA) Aerospace & Defense 16% 95%
Chipotle Mexican Grill Inc. (NYS:CMG) Restaurants 16% -23%
Discovery Communications Inc. Class C (NAS:DISCK) Movies/ Entertainment 15% -21%
Humana Inc. (NYS:HUM) Managed Health Care 15% 23%
Discovery Communications Inc. Class A (NAS:DISCA) Movies/ Entertainment 15% -18%
Lowe's Cos. (NYS:LOW) Home Improvement Chains 15% 33%
Hewlett Packard Enterprise Co. (NYS:HPE) Computer Processing Hardware 15% 9%
Schlumberger Ltd. (NYS:SLB) Oilfield Services/ Equipment 15% -17%
Thermo Fisher Scientific Inc. (NYS:TM) Medical Specialties 15% 35%
Anadarko Petroleum Corp. Oil & Gas Production 15% -23%
PayPal Holdings Inc. (NAS:PYPL) Data Processing Services 15% 87%
Source: FactSet

You can click the tickers for more information, including news coverage, price ratios, financials and filings.

Netflix Inc. (NAS:NFLX)  is the runaway winner, returning 40%, with investors cheering the company’s fourth-quarter sales and earnings results. The stock closed at $269.70 on Jan. 25 and traded for 117.3 times the consensus 2018 earnings estimate of $2.30 a share. That’s a remarkably high forward price-to-earnings ratio. Then again, Netflix is always expensive, and if the company can continue growing its sales at a 30%+ pace, you can expect the stock to maintain a high valuation to earnings.

Two-thirds of sell-side analysts rate the stock a buy, according to FactSet. But the consensus price target is $258.86, showing the analysts as a group don’t expect the stock to rise from here over the next 12 months.

Much more on Netflix and earnings season:

• Netflix analysts continue to focus on growth, overlook cash flow

• Netflix sees sharks approaching from both sides in Apple and Disney

• Individual stocks are getting a much bigger-than-usual jolt out of earnings

Here are the 35 worst-performing S&P 500 stocks:

Company Ticker Industry Total Return - YTD Total Return - 2017
Newell Brands Inc. (NAS:NWL) Industrial Conglomerates -20% -29%
Alaska Air Group Inc. (NYS:ALK) Airlines -16% -16%
L Brands Inc. Apparel/ Footwear Retail -13% -4%
Kimco Realty Corp. (NYS:KIM) Real Estate Investment Trusts -11% -24%
Range Resources Corp. (NYS:RRC) Oil & Gas Production -10% -50%
Albemarle Corp. (NYS:ALB) Chemicals: Specialty -9% 50%
Southwest Airlines Co. (NYS:LUV) Airlines -8% 32%
Public Storage (NYS:PSA) Real Estate Investment Trusts -8% -3%
Vornado Realty Trust (NYS:VNO) Real Estate Investment Trusts -8% -5%
American Water Works Co. (NYS:AWK) Water Utilities -8% 29%
Ford Motor Co. (NYS:F) Motor Vehicles -7% 9%
Regency Centers Corp. (NAS:REG) Real Estate Investment Trusts -7% 4%
General Electric Co. (NYS:GE) Industrial Conglomerates -7% -43%
Federal Realty Investment Trust (NYS:FRT) Real Estate Investment Trusts -7% -4%
Southern Co. (NYS:SO) Electric Utilities -7% 2%
HCP Inc. (NAS:HCP) Real Estate Investment Trusts -7% -8%
Duke Energy Corp. (NYS:DUK) Electric Utilities -6% 13%
Ventas Inc. (NYS:VTR) Real Estate Investment Trusts -6% 1%
Assurant Inc. (NYS:AIZ) Specialty Insurance -6% 11%
Boston Properties Inc. (NYS:BXP) Real Estate Investment Trusts -6% 6%
Dominion Energy Inc. (NYS:D) Electric Utilities -5% 10%
Consolidated Edison Inc. (NYS:ED) Electric Utilities -5% 19%
American Electric Power Co. (NAS:AEP) Electric Utilities -5% 21%
Alliant Energy Corp. (NAS:LNT) Electric Utilities -5% 16%
Mid-America Apartment Communities Inc. (NYS:MAA) Real Estate Investment Trusts -5% 6%
Iron Mountain Inc. (NYS:IRM) Real Estate Investment Trusts -5% 24%
CF Industries Holdings Inc. (NYS:CF) Chemicals: Agricultural -5% 40%
Acuity Brands Inc. (NYS:AYI) Electrical Products -5% -24%
NiSource Inc. (NYS:NI) Gas Distributors -5% 19%
CMS Energy Corp. (NYS:CMS) Electric Utilities -5% 17%
Pinnacle West Capital Corp. (NYS:PNW) Electric Utilities -5% 13%
AvalonBay Communities Inc. (NYS:AVB) Real Estate Investment Trusts -5% 4%
Welltower Inc. Real Estate Investment Trusts -5% 0%
Dentsply Sirona Inc. (NAS:XRAY) Medical Specialties -5% 15%
Realty Income Corp. (NYS:O) Real Estate Investment Trusts -5% 4%
Source: FactSet

Also see: Here’s what Trump’s weak-dollar policy means for the stock market

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