Starting in February 2020, the U.S. stock
market went into free fall, plummeting faster
than ever from an all-time high into a bear
market.
On March 23, the stock market hit bottom before
making a historic rise back to new all-time
highs in just five months.
Along the way, mega-cap tech stocks like Facebook,
Apple, Amazon, Alphabet, and Microsoft have
done much of the heavy lifting.
In fact, those five stocks make up almost
a quarter of the S&P 500 based on market-cap
weight, and their strong performance has buoyed
the market.
But there have been plenty of other names
that, on a percentage basis, have seen massive
triple-digit returns during the rebound.
So, we wondered, which five stocks had the
biggest percentage gain?
And why?
To find out, we searched stocks across the
three major indices: the Dow Jones, S&P 500,
and Nasdaq-100.
We looked at the period from March 23, which
was the bottom of the bear market, to August
18, the day the S&P officially began a new
bull market.
We asked our friend, and 30-year veteran trader,
Kevin Hincks to weigh in on the results, and
here's what we found.
Now remember, past performance is no guarantee
of future results, and we present these observations
as historical information and not a recommendation
of any security.
So, let's begin.
Number 5, Whirlpool.
As other companies struggled in the stay-at-home
economy, Whirlpool thrived thanks in part
to booming home sales, renovations, and kitchen
upgrades.
As a result, the company announced net sales
of $4 billion in the second quarter of 2020,
beating Wall Street estimates.
Not to mention, the company revised its forward-looking
guidance for the rest of the year.
The stock gained nearly 184% over the period
in question.
Yeah, it's easy to connect the dots on a
stock like Whirlpool to overall housing, right?
Demand for housing, stay at home, people may
be looking around their homes and saying we
need some new appliances.
So, not really surprising that a company like
Whirlpool did very well in a stay-at-home
economy.
Number 4, L Brands.
In what was already a rough start to the year
for retail, the pandemic crushed stocks like
L Brands, which includes stores like Victoria's
Secret and Bath & Body Works.
But the company took action and announced
an aggressive plan to slash costs by $400
million annually.
This and other factors helped the stock begin
to recover, and it gained nearly 208%.
Well retail apparel was some of the weakest
performers during the pandemic.
And that added with troubles with Victoria's
Secret along the way.
And were they going to spin it off, were they
going to keep it, Victoria Secret, one of
their bigger revenue products, was in flux
and in jeopardy for a while there, that has
stabilized, their sales have stabilized.
It ran from 11, you know to where it is now,
so it's not a $200 rally like we've had
in some names.
The number 3 and number 2 stocks on this list,
Halliburton and Apache Corp., are both in
the sector hit hardest during the pandemic:
Energy.
Both stocks experienced massive drops in value,
only to snap back and stabilize.
Haliburton has made a concerted effort to
pivot its business away from North American
shale and focus on international services
and other energy prospects.
Meanwhile, Apache shut down most of its active
drilling rigs in North Texas and both companies
have laid off large swaths of employees in
an effort to slash costs.
Yeah, uncertainty like we had in the oil futures
markets, causes uncertainty in the stocks
that are affiliated with the oil, oil markets.
So, picture a beach ball held under the water,
in some of these names, and there was unbelievable
pressure on some of these names, and high
risk in trading them.
I mean, remember, when you're talking about
mid to late march, this market sold off 36%
in 34 days, and the oil sector came under
even more pressure than that.
So, the recovery in some of these names, the
percentages are going to look pretty good
if you were willing to buy when no one was
willing to buy.
Number 1, Tesla.
Tesla stock has been on a meteoric rise, gaining
nearly 335% over the period we looked at.
The move has created a huge debate among investors--not
so much as to why the stock is up, but why
so much.
The stock's potential inclusion in the S&P
500 is one possible factor, not to mention
on August 11, the company announced a stock
split.
Despite criticism from Tesla bears, Tesla
advocates have pointed to four straight quarters
of profit and increased vehicle production
thanks in part to its expansion into China,
giving Tesla access to the world's biggest
car market while avoiding higher tariffs that
are imposed on vehicles made in the United
States.
I believe what will turn out to be the watershed
moment in their history is when they broke
into china and were able to open plants there,
and then obviously their ability to be profitable,
cash flow on hand, and just simply Elon Musk
and the inventor that he is.
So, I always say this about Tesla.
Apple started out as a computer company, Amazon
started out selling books, Tesla's going
to sell cars.
20 years from now, what will Tesla be in to?
So, which stocks will be next to see gains
like these?
Well, nobody really knows, but take it from
a veteran trader, there are some things investors
may want to keep their eyes on.
There's still a fair amount of stocks out
there that are still relatively cheap, and
what is it?
It's the re-opening trade.
Everything having to do with the pandemic
and stay home trade has been done and is fully
valued.
Does that mean they can't go higher?
No, they can probably go higher, but you've
got to be careful up there with some of these
stocks that have run a long way.
There's still a lot of choices out there,
it may not be the FAANG stocks and the Nasdaq
stocks but it may be those other names, that
good investors have to search for and do your
due diligence on and picture what companies
got beat up in the pandemic, so what companies
can benefit from a reopening of the U.S. economy
and then just be careful with your choices
and control your risk.
TD Ameritrade is where smart investors get
smarter.
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