S&P 500 – Top 20 stocks through October

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The S&P 500 closed down 1.94% in October as stocks sold off towards the end of the month. The S&P 500 has closed lower 9 days in a row and volatility continues to rise. For the year, the S&P 500 has returned 5.87%.

On a total return basis (including dividends), the the top 20 performing stocks in the S&P 500 through October are listed below.

A few observations of the list:

  • IT and select semiconductor producers have considerably outperformed the overall market
  • Miners and oil and  gas companies have benefited from a rebound in commodity prices
  • Time Warner jumped 13% after AT&T announced their intentions to acquire TWX
  • Most of these stocks appear to be overvalued

NVIDIA Corp

 

The top performer has seen nearly a 14% increase in revenue over the past 12 months. The company has returned capital through growing dividends and share buybacks.

The stock is trading at a P/E ratio of 41. With an average P/E of 17 for the past 5 years, the stock is now trading 3 standard deviations above that average.

ONEOK Inc

ONEOK bottomed out just under $20 in February with natural gas prices and has recovered nicely and now trades at $46.65. Despite the downturn in the natural gas market, the company has continued to pay a dividend and even increase it. Unfortunately, they have issued debt in order to do so and now have $9.4 billion in debt versus a market cap of $9.8 billion.

Newmont Mining and Freeport-McMoran

These two companies have rallied in response to gold and copper prices. Since mining companies require substantial capital spending, having a strong balance sheet is important. Newmont is in a better financial position with $5 billion  debt on a balance sheet of $25 billion in assets. In contrast, Freeport-McMoran increased their debt load substantially from 2012 to 2013 going from $3.5 billion to $20.7 billion. This leverage increases risk for stock investors as future cash flows will need to be used to make debt payments rather than returning capital to shareholders.

Top 20 S&P 500 Total Return Stocks through October

CompanyTickerIndustryTotal Return
NVIDIA CorpNVDASemiconductors & Semiconductor118%
ONEOK IncOKEOil, Gas & Consumable Fuels110%
Newmont Mining CorpNEMMetals & Mining106%
Spectra Energy CorpSEOil, Gas & Consumable Fuels82%
Freeport-McMoRan IncFCXMetals & Mining65%
Applied Materials IncAMATSemiconductors & Semiconductor58%
Albemarle CorpALBChemicals51%
Symantec CorpSYMCSoftware50%
Cummins IncCMIMachinery49%
Hewlett Packard Enterprise CoHPETechnology Hardware, Storage &49%
Urban Outfitters IncURBNSpecialty Retail47%
Southwestern Energy CoSWNOil, Gas & Consumable Fuels46%
PVH CorpPVHTextiles, Apparel & Luxury Goo45%
Cimarex Energy CoXECOil, Gas & Consumable Fuels45%
Linear Technology CorpLLTCSemiconductors & Semiconductor44%
Pioneer Natural Resources CoPXDOil, Gas & Consumable Fuels43%
F5 Networks IncFFIVCommunications Equipment43%
Quanta Services IncPWRConstruction & Engineering42%
QUALCOMM IncQCOMSemiconductors & Semiconductor41%
Kinder Morgan Inc/DEKMIOil, Gas & Consumable Fuels41%
Time Warner IncTWXMedia40%

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