The S&P 500 Index has risen 13 per cent in 2010 and is ending the year with a bang, as this month's gain is the best performance in almost two decades.
Every year has its big gainers, and this year's is a diverse group, ranging from the mundane -- two regional banks -- to the glamorous -- an international resort and casino owner.
And there is the usual representation of technology firms. Two of them are S&P 500 newcomers, F5 Networks and Netflix , which were added in mid-December.
Here is a look at the 10 best-performing S&P 500 stocks of 2010 and their prospects for next year. They are in inverse order based on their return.
10. Limited Brands is a specialty retailer of women's intimate apparel as well as beauty and personal-care products.
The company owns Victoria's Secret and Bath & Body Works, selling their merchandise through retail outlets, catalogs and Web sites. Revenue rose 13 per cent in the third quarter, compared to last year, beating analysts' 10% projection. Third-quarter net income more than quadrupled to $61-million.
Due to its strong cash flow and hefty cash balance, the company paid a $4 in special dividends this year. It also authorized a new $200-million stock-repurchase program. The company this week said it enjoyed a particularly strong holiday season, reporting a same-store sales increase of 10 per cent. Analysts had projected 4 per cent.
Outlook: Limited's stock has risen 86 per cent in 2010, including 22 per cent in the past three months. Analysts laud the company's effort to return value to investors via buybacks and dividends, but there is concern that the strength of its flagship Victoria's Secret brand could be eroded as discount retailers such as Target roll out their own line of undergarments.
Analysts' ratings are mixed, as nine rate Limited shares "buy," one "outperform," nine "hold" and one "sell." Janus Capital Management owns 8.9 per cent of its shares, about double that of the next largest investor.
9. Akamai Technologies designs software that accelerates the delivery of content over the Internet. In addition to its core cloud offering, Edge Platform, Akamai builds custom services for businesses. It runs an HD streaming network. Its mobile-focused subsidiary, Velocitude, was purchased in June.
Akamai operates a global network of servers that help large online shopping retailers. The rising trend in online shopping, as evidenced this holiday season by a 15 per cent increase in sales, bodes well for that segment. Since 2007, Akamai has increased revenue 19 per cent annually, on average, and boosted earnings per share 21 per cent a year. Akamai is in an outstanding position to grow in 2011, given that it holds $608-million of cash and has only $59-million of debt. Revenue for the third quarter grew by 23 per cent to $253.6-million, up 3 per cent from the second quarter.
Outlook: Akamai's stock is up 89 per cent this year, but is off 5 per cent over the past three months. Its forward price-to-earnings ratio is a high, 29.2, double that of the S&P 500. Morningstar analyst Imari Love writes that "Akamai is an ideal buyout candidate for a firm that wants to improve its infrastructure relationship with the premier content delivery provider."
Of the analysts that follow the company, five rate it "buy," two "outperform" and 17 "hold." T. Rowe Price owns 8.2 per cent of its shares.
8. Zions Bancorp is a financial holding company operating eight different banks. Through its 500 branches, it provides banking services for small and medium-sized businesses and individuals. Most of its $55-billion assets are in the economically hard-hit states of Utah, California, Texas, Arizona and Nevada.
Zions has about 50 per cent of its $40-billion loan book in commercial lending operations, 30 per cent in commercial real estate, and 20 per cent in consumer loans. It lost $80 million, or 47 cents a share in the third quarter, but that's an improvement from the $135-million loss in the second quarter.
Outlook: Regional-bank stocks have been boosted in recent weeks by merger speculation and Zions is no exception, gaining 26 per cent in the past month. Analysts are cautious about its prospects. Seven have it rated "strong buy," six "buy," 18 "hold," three "underperform" and one "sell," according to First Call/Thomson Financial. Their mean price target is $24.59.
- F5 Networks Inc$104.75+0.51(+0.49%)
- Netflix Inc$90.03-0.25(-0.28%)
- Akamai Technologies Inc$50.99-1.42(-2.71%)
- Zions Bancorporation$27.52+0.01(+0.04%)
- Wynn Resorts Ltd$88.30-0.92(-1.03%)
- American International Group Inc$55.82-0.01(-0.02%)
- Quintiles Transnational Holdings Inc$69.07-0.91(-1.30%)
- Huntington Bancshares Inc$10.06-0.06(-0.59%)
- Cummins Inc$117.03+0.42(+0.36%)
- Cisco Systems Inc$27.49-0.47(-1.68%)
- Updated April 29 4:00 PM EDT. Delayed by at least 15 minutes.