Inside Wall Street: Meet 2010's Top 10 Winners on the S&P 500 (and the Losers)

Gene Marcial's Inside Wall Street
Gene Marcial's Inside Wall Street

As the year-end approaches, investors are in for a surprise about which stocks among those in the Standard & Poor's 500-stock index spearheaded the unexpectedly robust stock market upswing in 2010. S&P's Capital IQ service tracks such data, keeping tabs of the top gainers and losers for specific time periods.

With the economy slowly but surely wending its way toward a recovery, it's surprising that the economically sensitive and cyclical stocks didn't come to the fore as leaders in the stock market's impressive advance this year. Cummins (CMI), a maker of truck engines, is the only one that comes close to the camp of economy-driven stocks. It topped the winners' list for the year.

The others among the market's upbeat performers included shares of companies that provide Internet services, energy, natural and organic food, a regional bank, discount retailer, and gambling. On the dark side, among the cellar-dwellers were shares of companies in dairy processing, forest products, adult education, offshore drilling and steel manufacturing.

Here are the top 10 stock performers so far this year, from Dec. 31, 2009 to Dec. 2, 2010:

  • Cummins (CMI), a leading global manufacturer of truck engines and power equipment as well as industrial filters, was the year's super-performer, soaring 126.7%, to $103.97 a share on Dec. 2, way up from $45.86 on Dec. 31, 2009.

  • Akamai Technologies (AKAM), which develops and deploys products and services designed to accelerate and improve delivery of Internet content and applications, was also a huge gainer, leaping 107%, to $52.45, from $25.34.

  • (CRM), a major online provider of on-demand CRM, or customer relationship management applications, which jumped 93.9%, to $143.02, from 473.77.

  • (PCLN), a leading online travel company that provides a broad array of services, primarily in the U.S. and Europe, including airline tickets, hotel accommodations, cruises, car rentals and vacation packages. Its stock flew 84.5%, to $402.99.

  • Family Dollar Stores (FDO), which operates a chain of more than 6,800 retail discount stores in 44 states. Its stock climbed 81.9%, to $50.61 from $27.83.

  • Limited Brands (LTD), a specialty retailer of women's apparel, lingerie and personal care and beauty products in its 3,000 stores. It advanced 81.4%, to $34.90 from $19.24.

  • Whole Foods Market (WFMI), which owns and operates the largest U.S. chain of natural and organic foods supermarkets, with 300 outlets in 37 states, plus Washington D.C., Canada and Britain. Its stock climbed 78.7%, to $49.04 from $27.45.

  • Wynn Resorts (WYNN), a designer and developer of gambling casinos in Las Vegas and Macau (China), which registered a lucky-number gain of 77.7%, to $103.47 from $58.23.

  • Pioneer Natural Resources (PXD), an oil and gas explorer and producer in the U.S., Canada, and Africa, whose stock spurted 74.2%, to $83.92 from $48.17.

  • Huntington Bancshares (HBAN), a small-cap regional bank-holding company with 624 banking offices in Ohio, Michigan, Indiana, Pennsylvania, Kentucky, West Virginia and Florida. Its stock ran up 71.2%, to $6.25 a share from $3.65.

The top-10 losers among the S&P 500 stocks were led by Dean Foods (DF), a U.S. dairy processor and distributor, whose stock tumbled 59.6%, to $7.29; Weyerhaeuser (WY), one of the world's largest forest-products company, which fell 59.33%, to $17.54; and Apollo Group (APOL), a provider of higher education for working adults, which declined 41.6%, to $35.35.

The other worst-performing stocks were H&R Block (HRB), AK Steel (AKS), Pulte Group ((PHM), Diamond Offshore Drilling (DO), SuperValu (SVU), Goodyear Tire & Rubber (GT), and Office Depot (ODP).

Goldman Sees a "Superb Backdrop" for Stocks

That's what happened so far in 2010. Now, what's the outlook for the stock market in the coming 2011?

Believe it or not, the forecast for next year is quite positive. Investors should get good tidings for the coming year.

"A superb backdrop for U.S. stocks," is how Goldman Sachs portfolio strategists describe the market's prospects for 2011. Simply put, Goldman's research team says in a Dec. 1, 2010, report that it expects the market to climb 23% next year. What's the basis for such an optimistic prediction?

U.S. GDP growth should accelerate to 4% by mid-2012, and interest rates over the short and long term will remain low through 2012. And inflation, estimates Goldman, will also stay low even as the strategists predict "solid 10%-12% earnings-per-share growth. They also forecast an 11% corporate dividend growth.

Which Will Be the Best Sectors?

"We expect the Standard & Poor's 500 earnings to rise by 12%, to $94, in 2011, and by 11% to $104 in 2012," says the Goldman team. As to the question of which sectors will participate in next year's positive outlook, Goldman says the financials, technology and energy will generate 50% of the S&P 500's earnings per share in 2011. As a result, these groups are expected to outperform the market.

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The Goldman strategists have specific targets for how the S&P 500 will fare over the next three-, six- and 12-month periods. For the first three months of 2011, Goldman sees the S&P 500 rising to 1,250 -- not too far from where it closed on Dec. 7, at 1,223.75. And after six months, the firm forecasts the S&P 500 will climb to 1,325. And by year-end, Goldman expects the S&P 500 will have risen to 1,450.

Given this upbeat forecast, Goldman recommends overweighting the cyclical, information-technology, financial and energy stocks. On the other hand, it recommends underweighting the so-called defensive health care, consumer staple and utility stocks. If this information, analysis and recommendations are on the money, 2011 may turn out to be another year of great opportunities.