BOSTON -- The top 10 performers in the benchmark S&P 500 so far this year aren't easy to characterize. They range from Freeport-McMoRan Copper & Gold to Bank of America.
The S&P 500 gained 4.4% in January, the biggest increase for that month in 15 years, helped by signs the European sovereign debt crisis that has hung like a cloud over the markets might be coming to a resolution soon. And, perhaps secondarily, the Federal Reserve said it would remain active in boosting the economy and keep inflation in check.
The top 10 companies in the S&P 500 in January had share gains that were clustered in the 27% to 39% range, with DVD and digital entertainment deliverer Netflix the outlier with a whopping 77% jump.
Still, if you look back to the end of 2010, many of these stocks are still in the hole, so a month or so of increases doesn't wipe that out.
In inverse order of return, here are the S&P 500's 10 best-performing stocks of January:
The S&P 500's 10 Best-Performing Stocks of 2012 (so far)
The S&P 500's 10 Best-Performing Stocks of 2012 (So Far)
Performance: up 27% (but still down 20% since the end of 2010).
Company profile: Owens-Illinois is the world's largest manufacturer of glass bottles, with operations in 21 countries.
Investor takeaway: For 2011, the company earned $2.37 per share versus $2.60 in 2010. However, it also took a $640 million charge for a variety of reasons in the quarter that resulted in a loss of $4.71 per share on a GAAP accounting basis. It is covered by two analysts, resulting in ratings of one "buy" and one "hold."
Performance: up 27% (but still down 23% since the end of 2010)
Company profile: Freeport-McMoRan's mines produce more copper and molybdenum than any other company in the world. It also produces gold.
Investor takeaway: Metals mining have historically been highly volatile. Analysts give Freeport-McMoRan eight "buys" and one "hold," according to Morningstar. Two weeks ago, the company reported that fourth-quarter net profit was $640 million, down from $1.5 billion in same period of 2010, but full-year earnings hit a record $4.6 billion.
Performance: up 29% (but still down 47% from year-end 2010)
Company profile: Bank of America is one of the largest financial institutions in the world, with lending operations in the consumer, small business, and corporate arenas as well as asset management and investment banking divisions. It just reported net income of $85 million, or 1 cent per share, for 2011, roughly in line with analysts' expectations.
Investor takeaway: The bank faces lots of challenges before it returns to solid fiscal health, but investors apparently think they can be met, given the share-price rise. It was trading at half of book value late last year, so investors may think it hit bottom.
Company profile: Eastman Chemical is a global producer of chemicals, plastics and fibers, with manufacturing sites in seven countries.
Investor takeaway: During January, the company announced the $4.7 billion acquisition of Solutia (SOA), another chemicals and plastics-making firm, which may have contributed to the price pop. Although it has a diverse international customer base, some of its biggest customers are in the cyclical auto and construction industries. S&P has it rated "buy" and its $60 price target is a 20% premium to the current price.
Company profile: LSI is a maker including of specialized circuits that support applications in enterprise storage and networking.
Investor takeaway: Although it reported a fourth-quarter loss two weeks ago, LSI gave an upbeat outlook for the current quarter, saying it expects revenue in the range of $550 million to $590 million, far ahead of analysts' $511 million, according to data from FactSet Research. S&P's review of analysts' ratings found six "buys," two "buy/holds," five "holds" and one "weak hold."
Performance: up 31% (but still down 66% from year-end 2010)
Company profile: First Solar manufactures solar modules and turnkey solar systems. It has a competitive advantage due to its technology.
Investor takeaway: The company likely got a boost when, late in January, the MidAmerican Energy unit of Warren Buffett's Berkshire Hathaway (BRK.B) said it has started a new company to oversee a variety of solar, wind and other renewable-energy projects. In December, MidAmerican said it would buy a $2 billion California solar farm from First Solar, lending support to the outlook for the whole industry.
Performance: up 39% (but still down 40% from year-end 2010)
Company profile: Sears Holdings is the parent to Sears, Sears Canada and Kmart stores and the fourth-largest retailer in the U.S.
Investor takeaway: This troubled stock rose on speculation that its primary shareholder, hedge fund manager Edward Lampert, may seek to take it private. Everything else seems to be going against Sears, including steadily declining earnings, but it does generate significant cash flow, which it has used to buy back shares and pay down debt. But a Morningstar analyst recently wrote that "we don't forecast much growth for Sears, but we do see the potential for a marginal improvement in operating results in 2013-2014 if the appliance market can rebound off current lows."
Company profile: Textron's wide-ranging business interests span the aerospace, defense, financial and industrial markets. Its Cessna is the leader in business jets, while its Bell unit is a popular maker of helicopters.
Investor takeaway: Textron is in many cyclical businesses and its defense sector is vulnerable to Congressional budget cutting. For 2012, its management is targeting an 11% improvement in sales, driven by further gains at Cessna and Bell, and $1.80 to $2 per share in earnings, about 35% to 50% higher than 2011's adjusted earnings. Since the end of 2010, its shares are up 8%.
Performance: up 77% (but it's still down 29% from the end of 2010).
Company profile: Netflix operates a fast-growing DVD rental and video streaming service and its customers are transitioning from DVDs to digital streaming content.
Investor takeaway: Down 60% in 2011 after gaining 219% in 2010, this stock is not for the faint of heart. Recent moves by the management team, specifically trying to raise rates by a huge amount, have added uncertainty to what is already a challenging market for the company as digital service takes over its industry