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4 S&P 500 Stocks Up More Than 30% YTD With More Room to Run
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The S&P 500 Index jumped 2.77% to a three-month high of 4,100.96 points on Dec 13, 2022, before settling lower to close at 4,019.65 points on Dec 13, 2022. This was triggered by the lower-than-expected Consumer Price Index released by the U.S. Bureau of Labor Statistics.
The index has eased for the fifth straight month, fueling optimism in the market that the Federal Reserve will start dialing down its interest rate hikes. Notwithstanding the uptick, the S&P 500 has lost 15.7% year to date amid record-high inflation, geopolitical risks and high interest rates.
Despite the overall scenario, stocks like Enphase Energy (ENPH - Free Report) , Halliburton (HAL - Free Report) , Cardinal Health (CAH - Free Report) and W.R. Berkley Corp. (WRB - Free Report) have soared and handily outperformed the S&P 500 as well as their broader sectors. Backed by a solid Zacks Rank and their inherent growth potential, they also have the wherewithal for healthy growth in 2023.
S&P 500 Performance To Date
The S&P 500 had kick-started the year by attaining an all-time high of 4,818 points on Jan 3. However, the bubble burst soon, and we saw significant market volatility for the most part of the year due to multi-decade-high inflation, geopolitical risks, and central banks hiking at paces not seen in decades. The S&P Index had fallen to a trough of 3,491.58 points on Oct 13 – at levels last seen in November 2020.
However, the index has garnered gains over the past two months as the Consumer Price Index, which measures the change in prices paid by consumers for goods and services, has shown a downtrend over the past five months since hitting the peak of 9.1% in June — the highest in four decades.
In spite of this uptick, the benchmark U.S. index has declined 15.7% so far this year. Accompanied by the looming threat of a recession, nine of the 11 sectors in the index have remained in the red, with some been hit harder than others.
Apart from stubbornly high costs, the market participants have been subject to persistent headwinds like supply-chain constraints, logistics and labor issues. However, several countermeasures, including supply-chain management, price hikes and focus on cost-management, proved to be some relief.
The Laggards: The Communication Services sector fared the worst, tumbling 37% year to date, and the Consumer Discretionary sector followed suit with a 33.8% loss, owing to soaring inflation and weak consumer sentiment. The Real Estate sector has fallen 24.2%. The information technology sector, which has the highest weightage in the S&P 500 (accounting for around 28%), has suffered a 22.8% year-to-date plunge. Healthcare and Financials, which are among the top 3 sectors in the index, have declined a respective 0.9% and 10.6%.
Although sectors like Financials and Materials have lost 10.6% and 8.9%, respectively, they have fared better than the overall index. Industrials, Healthcare and Consumer Staples have also declined, but in single digits.
The Winners: The Oils and Energy sector is a clear outperformer this year, logging growth of 55.3% as sanctions surrounding Russia have impacted oil and gas supplies, resulting in sharp price increases. The utilities sector posted a meager rise of around 1%.
Latest Data Instill Optimism
As per the latest release, the Consumer Price Index for All Urban Consumers rose 0.1% in November (on a seasonally adjusted basis), down from 0.4% in October. Over the past 12 months ended November, the all items index came in at 7.1%, lower than the expected 7.3% and 7.7% in October. It also marked the lowest reading since December 2021. This raised expectations that the Fed will hike its benchmark interest rate at its upcoming meeting by 50 basis points, lower than the previous 75 basis points.
The unemployment rate in the United States was unchanged at 3.7% in November 2022, remaining close to September’s 29-month low of 3.5%. The rate has been in a narrow range of 3.5% to 3.7% since March. The U.S. real gross domestic product (GDP) increased at an annual rate of 2.9% in the third quarter of 2022, a turnaround from the 0.6% decline in the second quarter.
Stocks are expected to gain in 2023, aided by cooling inflation and the gradual reopening in China as it loosens its stringent zero-COVID policy.
Top Picks
Using the Zacks Stocks Screener, we have zeroed in on four S&P 500 stocks that have gained more than 30% so far this year. These stocks carry either a Zacks Rank #1 (Strong Buy) or 2 (Buy). They also carry either a VGM Score of A or B, which when combined with a Zacks Rank #1 or 2, offer the best upside potential. The stocks have been witnessing favorable earnings estimate revisions as well. You can see the complete list of today’s Zacks #1 Rank stocks here.
Halliburton: The Houston, TX-based company provides products and services to the energy industry worldwide. It currently sports a Zacks Rank #1 and a VGM Score of B. Over the past 60 days, the Zacks Consensus Estimate for earnings has improved 4% for 2022 and 7% for 2023. The consensus mark indicates year-over-year growth of 94% for 2022 and 42% growth for 2023. HAL has an average trailing four-quarter earnings surprise of 3%
Halliburton generates 45% of its revenues in North America, which positions it to take advantage of rising U.S. land drilling activity, tightening supply/demand fundamentals and pricing momentum. HAL’s flagship Completion & Production unit’s margins are likely to be strong, with management expecting better pricing leverage going forward.
A strong free cash flow generating ability indicates its financial strength. Its healthy relationship with national oil companies also bode well. The successful and expanded use of digital technologies has helped the company enhance performance while lowering operational risk. The company’s shares have gained 61.8% so far this year, against the sector’s growth of 28.3%.
Image Source: Zacks Investment Research
Enphase Energy: Headquartered in Fremont, CA, the company designs, develops, manufactures and sells home energy solutions for the solar photovoltaic industry in the United States and internationally. ENPH carries a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for 2022 and 2023 indicate year-over-year growth of 83% and 35%, respectively. The estimate for 2022 has moved up 7.6% over the past 60 days and the same for 2022 has gone up 8.2%. ENPH has an average trailing four-quarter earnings surprise of 21.8%. It has a long-term estimated earnings growth rate of 47.3%.
Enphase enjoys a strong position as a leading U.S. manufacturer of microinverters and a valuable position in the solar market by manufacturing fully integrated solar-plus-storage solutions. To gain share in the promining solar market, the company constantly strives to bring new versions of its family of microinverters.
ENPH is also actively looking at expanding manufacturing capacity in the United States and plans to open four to six manufacturing lines by the second half of 2023. This will help it meet strong demand in the days ahead and gain from the production-based tax credit provided by the Inflation Reduction Act for the domestic manufacturing of microinverters. Backed by these tailwinds, the company’s shares have surged 78.2% year to date, outperforming its sector’s growth of 28.3%.
Image Source: Zacks Investment Research
Cardinal Health: Based in Dublin, OH, the company operates as an integrated healthcare services and products company in the United States, Canada, Europe, Asia and internationally. The Zacks Consensus Estimate for both 2022 and 2023 earnings has been revised 1% upward over the past 60 days. While the estimate for 2022 projects year-over-year growth of 4%, the same for 2023 indicates year-over-year growth of 14%. CAH has an average trailing four-quarter earnings surprise of 3% and long-term estimated earnings growth of 11.2%. The stock currently carries a Rank #2 and has a VGM Score of A.
Cardinal Health’s Medical and Pharmaceutical offerings provide the company with a competitive edge in the niche space. It has a diversified product portfolio, which is a hedge against the risk of a sales shortfall in testing times. The ongoing momentum in the Pharmaceutical sales bodes well.
Apart from better-than-expected revenues, CAH’s plans to build a new medical distribution center in the central Ohio area, partnership with Innara Health and Kinaxis, and the introduction of the first surgical incise drape were the highlights of its recently reported fourth-quarter fiscal 2022. Aided by these factors, the company’s shares have gained 52% so far this year, against the 16.9% decline witnessed by its sector.
The company is pursuing growth via joint ventures and long-term supply agreements with several firms. Apart from making strategic investments in its IT infrastructure to improve customer experience and digital abilities, the company is investing in its differentiated portfolio to drive strategic long-term growth in key areas, which can lend support and fulfill its customers' needs.
Image Source: Zacks Investment Research
W.R. Berkley Corp.: This Greenwich, CT-based company is one of the nation’s largest commercial lines property casualty insurance providers. Over the past 60 days, the Zacks Consensus Estimate for WRB’s earnings has improved 5% for 2022 and 6% for 2023. The consensus estimates indicates year-over-year growth of 26.2% for 2022 and 11.5% for 2023. The company has an average trailing four-quarter earnings surprise of 25.6% and a long-term earnings growth of 9%.
W.R. Berkley has been consistently benefiting from its insurance business, which has been performing well, witnessed by an increase in premium written from past many years. This business growth has been achieved on the back of several new startup units in varied business lines (including healthcare, cyber security, energy and agriculture, and on growing international markets, including the Asia-Pacific region, South America and Mexico), which have also provided diversification benefits. These factors have been instrumental in the 33% gain in its share price so far this year, against the sector’s 13.6% decline.
WRB has been investing in numerous startups since 2006 and establishing new units in growing international markets. Its international business is poised for growth supported by emerging markets. A solid capital position enables capital deployment. Investment in alternative assets should help improve investment income.
Image Source: Zacks Investment Research
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4 S&P 500 Stocks Up More Than 30% YTD With More Room to Run
The S&P 500 Index jumped 2.77% to a three-month high of 4,100.96 points on Dec 13, 2022, before settling lower to close at 4,019.65 points on Dec 13, 2022. This was triggered by the lower-than-expected Consumer Price Index released by the U.S. Bureau of Labor Statistics.
The index has eased for the fifth straight month, fueling optimism in the market that the Federal Reserve will start dialing down its interest rate hikes. Notwithstanding the uptick, the S&P 500 has lost 15.7% year to date amid record-high inflation, geopolitical risks and high interest rates.
Despite the overall scenario, stocks like Enphase Energy (ENPH - Free Report) , Halliburton (HAL - Free Report) , Cardinal Health (CAH - Free Report) and W.R. Berkley Corp. (WRB - Free Report) have soared and handily outperformed the S&P 500 as well as their broader sectors. Backed by a solid Zacks Rank and their inherent growth potential, they also have the wherewithal for healthy growth in 2023.
S&P 500 Performance To Date
The S&P 500 had kick-started the year by attaining an all-time high of 4,818 points on Jan 3. However, the bubble burst soon, and we saw significant market volatility for the most part of the year due to multi-decade-high inflation, geopolitical risks, and central banks hiking at paces not seen in decades. The S&P Index had fallen to a trough of 3,491.58 points on Oct 13 – at levels last seen in November 2020.
However, the index has garnered gains over the past two months as the Consumer Price Index, which measures the change in prices paid by consumers for goods and services, has shown a downtrend over the past five months since hitting the peak of 9.1% in June — the highest in four decades.
In spite of this uptick, the benchmark U.S. index has declined 15.7% so far this year. Accompanied by the looming threat of a recession, nine of the 11 sectors in the index have remained in the red, with some been hit harder than others.
Apart from stubbornly high costs, the market participants have been subject to persistent headwinds like supply-chain constraints, logistics and labor issues. However, several countermeasures, including supply-chain management, price hikes and focus on cost-management, proved to be some relief.
The Laggards: The Communication Services sector fared the worst, tumbling 37% year to date, and the Consumer Discretionary sector followed suit with a 33.8% loss, owing to soaring inflation and weak consumer sentiment. The Real Estate sector has fallen 24.2%. The information technology sector, which has the highest weightage in the S&P 500 (accounting for around 28%), has suffered a 22.8% year-to-date plunge. Healthcare and Financials, which are among the top 3 sectors in the index, have declined a respective 0.9% and 10.6%.
Although sectors like Financials and Materials have lost 10.6% and 8.9%, respectively, they have fared better than the overall index. Industrials, Healthcare and Consumer Staples have also declined, but in single digits.
The Winners: The Oils and Energy sector is a clear outperformer this year, logging growth of 55.3% as sanctions surrounding Russia have impacted oil and gas supplies, resulting in sharp price increases. The utilities sector posted a meager rise of around 1%.
Latest Data Instill Optimism
As per the latest release, the Consumer Price Index for All Urban Consumers rose 0.1% in November (on a seasonally adjusted basis), down from 0.4% in October. Over the past 12 months ended November, the all items index came in at 7.1%, lower than the expected 7.3% and 7.7% in October. It also marked the lowest reading since December 2021. This raised expectations that the Fed will hike its benchmark interest rate at its upcoming meeting by 50 basis points, lower than the previous 75 basis points.
The unemployment rate in the United States was unchanged at 3.7% in November 2022, remaining close to September’s 29-month low of 3.5%. The rate has been in a narrow range of 3.5% to 3.7% since March. The U.S. real gross domestic product (GDP) increased at an annual rate of 2.9% in the third quarter of 2022, a turnaround from the 0.6% decline in the second quarter.
Stocks are expected to gain in 2023, aided by cooling inflation and the gradual reopening in China as it loosens its stringent zero-COVID policy.
Top Picks
Using the Zacks Stocks Screener, we have zeroed in on four S&P 500 stocks that have gained more than 30% so far this year. These stocks carry either a Zacks Rank #1 (Strong Buy) or 2 (Buy). They also carry either a VGM Score of A or B, which when combined with a Zacks Rank #1 or 2, offer the best upside potential. The stocks have been witnessing favorable earnings estimate revisions as well. You can see the complete list of today’s Zacks #1 Rank stocks here.
Halliburton: The Houston, TX-based company provides products and services to the energy industry worldwide. It currently sports a Zacks Rank #1 and a VGM Score of B. Over the past 60 days, the Zacks Consensus Estimate for earnings has improved 4% for 2022 and 7% for 2023. The consensus mark indicates year-over-year growth of 94% for 2022 and 42% growth for 2023. HAL has an average trailing four-quarter earnings surprise of 3%
Halliburton generates 45% of its revenues in North America, which positions it to take advantage of rising U.S. land drilling activity, tightening supply/demand fundamentals and pricing momentum. HAL’s flagship Completion & Production unit’s margins are likely to be strong, with management expecting better pricing leverage going forward.
A strong free cash flow generating ability indicates its financial strength. Its healthy relationship with national oil companies also bode well. The successful and expanded use of digital technologies has helped the company enhance performance while lowering operational risk. The company’s shares have gained 61.8% so far this year, against the sector’s growth of 28.3%.
Image Source: Zacks Investment Research
Enphase Energy: Headquartered in Fremont, CA, the company designs, develops, manufactures and sells home energy solutions for the solar photovoltaic industry in the United States and internationally. ENPH carries a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for 2022 and 2023 indicate year-over-year growth of 83% and 35%, respectively. The estimate for 2022 has moved up 7.6% over the past 60 days and the same for 2022 has gone up 8.2%. ENPH has an average trailing four-quarter earnings surprise of 21.8%. It has a long-term estimated earnings growth rate of 47.3%.
Enphase enjoys a strong position as a leading U.S. manufacturer of microinverters and a valuable position in the solar market by manufacturing fully integrated solar-plus-storage solutions. To gain share in the promining solar market, the company constantly strives to bring new versions of its family of microinverters.
ENPH is also actively looking at expanding manufacturing capacity in the United States and plans to open four to six manufacturing lines by the second half of 2023. This will help it meet strong demand in the days ahead and gain from the production-based tax credit provided by the Inflation Reduction Act for the domestic manufacturing of microinverters. Backed by these tailwinds, the company’s shares have surged 78.2% year to date, outperforming its sector’s growth of 28.3%.
Image Source: Zacks Investment Research
Cardinal Health: Based in Dublin, OH, the company operates as an integrated healthcare services and products company in the United States, Canada, Europe, Asia and internationally. The Zacks Consensus Estimate for both 2022 and 2023 earnings has been revised 1% upward over the past 60 days. While the estimate for 2022 projects year-over-year growth of 4%, the same for 2023 indicates year-over-year growth of 14%. CAH has an average trailing four-quarter earnings surprise of 3% and long-term estimated earnings growth of 11.2%. The stock currently carries a Rank #2 and has a VGM Score of A.
Cardinal Health’s Medical and Pharmaceutical offerings provide the company with a competitive edge in the niche space. It has a diversified product portfolio, which is a hedge against the risk of a sales shortfall in testing times. The ongoing momentum in the Pharmaceutical sales bodes well.
Apart from better-than-expected revenues, CAH’s plans to build a new medical distribution center in the central Ohio area, partnership with Innara Health and Kinaxis, and the introduction of the first surgical incise drape were the highlights of its recently reported fourth-quarter fiscal 2022. Aided by these factors, the company’s shares have gained 52% so far this year, against the 16.9% decline witnessed by its sector.
The company is pursuing growth via joint ventures and long-term supply agreements with several firms. Apart from making strategic investments in its IT infrastructure to improve customer experience and digital abilities, the company is investing in its differentiated portfolio to drive strategic long-term growth in key areas, which can lend support and fulfill its customers' needs.
Image Source: Zacks Investment Research
W.R. Berkley Corp.: This Greenwich, CT-based company is one of the nation’s largest commercial lines property casualty insurance providers. Over the past 60 days, the Zacks Consensus Estimate for WRB’s earnings has improved 5% for 2022 and 6% for 2023. The consensus estimates indicates year-over-year growth of 26.2% for 2022 and 11.5% for 2023. The company has an average trailing four-quarter earnings surprise of 25.6% and a long-term earnings growth of 9%.
W.R. Berkley has been consistently benefiting from its insurance business, which has been performing well, witnessed by an increase in premium written from past many years. This business growth has been achieved on the back of several new startup units in varied business lines (including healthcare, cyber security, energy and agriculture, and on growing international markets, including the Asia-Pacific region, South America and Mexico), which have also provided diversification benefits. These factors have been instrumental in the 33% gain in its share price so far this year, against the sector’s 13.6% decline.
WRB has been investing in numerous startups since 2006 and establishing new units in growing international markets. Its international business is poised for growth supported by emerging markets. A solid capital position enables capital deployment. Investment in alternative assets should help improve investment income.
Image Source: Zacks Investment Research