S&P 500: 10 Stocks Turned $10000 Into $459770 In 10 Months – Investor's Business Daily

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October somewhat lived up to its name as a “jinx month” for the S&P 500. But investors who found top stocks still won big gains — adding to 2020’s growing rewards.

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Don’t be too discouraged that the S&P 500 fell 1.4% in October. Investors paying attention could still find plenty of gains. Nearly half the stocks in the S&P 500 gained in October, topped by leaders like health care firm Align Technology (ALGN), information technology Paycom (PAYC) and industrial Quanta Services (PWR). This means if you’ve been in the right place at the right time, you’ve made some money — even in this volatile market.

All told, had you invested $10,000 in January and reinvested your money into the S&P 500’s top stocks each month, including in October, you’d have $459,700, an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith shows.

Hindsight is 20/20. And clearly, few if any investors could have pulled this off as it’s not a repeatable strategy. But the staggering numbers are a reminder to investors big gains are possible even in volatile years if you focus on leaders. Meanwhile, had you put $10,000 in the S&P 500, you’d have just $10,260. The S&P 500, dragged down recently by lagging stocks and sectors, is up just 2.6% this year.

“Plenty of damage has been done from the past couple of week’s selling,” said a report from Bespoke Investment Research. “Every sector is lower over the past week with energy, financials and industrials having received the worst hits.”

S&P 500: What Worked In October

The S&P 500’s October decline of 1.4% isn’t all that surprising. October is usually a middling month for stocks.

On average, the S&P 500 rises 0.8% in October, says “Stock Trader’s Almanac,” citing data tracking from 1950. But here’s the wildcard this year: the election. The S&P 500 typically does worse in election years, falling 0.7% on average. This October has been slightly worse than that. Also, investors continue to deal with what looks like a new surge in Covid-19 cases around the world.

“Pre-election market volatility is not unusual and has arisen around swirling questions about elections, Covid-19 and economic and earnings growth,” said Wells Fargo Investment Institute’s Head of Market Strategy Paul Christopher in a report. “This indigestion triggered declines in the S&P 500 index.”

So what S&P 500 stocks worked in October? Many S&P 500 leaders showed they’re shielded from struggles of other stocks. Four of the top 10 S&P 500 companies in October sport IBD Composite Ratings of 90 or higher. This means their stock charts and earnings top at least 90% of all stocks. Those are Align, Paycom, Quanta and tech stock Xilinx (XLNX), which are up 33.4%, 19.8%, 18.5% and 17.9%, respectively.

Top S&P 500 Stocks In October

Company Symbol October 2020 % Ch. Sector Composite Rating
Tapestry (TPR) 45.4% Consumer Discretionary 67
Align Technology (ALGN) 33.4% Health Care 97
Under Armour (UAA) 22.8% Consumer Discretionary 33
Paycom Software (PAYC) 19.8% Information Technology 96
Ford Motor (F) 18.6% Consumer Discretionary 66
Quanta Services (PWR) 18.5% Industrials 91
General Electric (GE) 18.3% Industrials 20
General Motors (GM) 17.9% Consumer Discretionary 81
Xilinx (XLNX) 17.9% Information Technology 90
Twitter (TWTR) 17.8% Communication Services 79
Sources: IBD, S&P Global Market Intelligence

Owning The Month’s Top Stock Turns $10,000 Into $459,770

Each month of this year told the story of investors’ up-and-down moods all year. And in October, investors returned to hoping for a comeback in the consumer.

Tapestry (TPR), a seller of high-end consumer discretionary items like purses, jumped 45% in October. No other S&P 500 stock did anything near that. It’s a continuation of investors trying to find consumer stocks that might bounce back from the pandemic. On Oct. 29, the company reported a 45% higher third-quarter profit of 58 cents a share. That was remarkable on two levels. First, it snapped the company’s losses in the first and second quarters. Second, Tapestry’s third-quarter profit topped expectations by 163%.

And notably, October is the fourth month in a row so far where the top S&P 500 stock is in the consumer discretionary sector. Last month, in September, restaurant Darden (DRI) jumped 16% as the S&P 500 dropped 4%. And the big winner in August was Royal Caribbean (RCL), adding 16% when the S&P 500 fell 4.1%.

And now all eyes are on November and the election. Big changes could be afoot.

“While history has shown that political parties have had little influence on the markets over longer time frames, an economic policy shift could have a profound impact on the markets over time,” said Jack Ablin, Chief Investment Officer at Cresset Capital Management.

Top S&P 500 Stocks Each Month In 2020

Month Top S&P 500 Stock Symbol Stock monthly % Gain Sector S&P 500 % Monthly Gain Cumulative Value Of $10,000 Investment In January Reinvested In The Top Stock Each Month
January L Brands (LB) 27.8% Consumer Discretionary 0.0% $12,780
February Regeneron Pharmaceuticals (REGN) 31.6% Health Care -7.9% $16,816
March Citrix Systems (CTXS) 36.9% Information Technology -13.0% $23,025
April Apache (APA) 155.3% Energy 10.9% $58,782
May Abiomed (ABMD) 36.2% Health Care 6.5% $80,061
June Occidental Petroleum (OXY) 36.6% Energy -1.4% $109,363
July L Brands (LB) 76.1% Consumer Discretionary 8.8% $192,588
August Royal Caribbean (RCL) 41.3% Consumer Discretionary 7.0% $272,126
September Darden Restaurants (DRI) 16.2% Consumer Discretionary -4.1% $316,210
October Tapestry (TPR) 45.4% Consumer Discretionary -1.4% $459,770
Sources: IBD, S&P Global Market Intelligence
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