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
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 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
|NVIDIA Corp||NVDA||Semiconductors & Semiconductor||118%|
|ONEOK Inc||OKE||Oil, Gas & Consumable Fuels||110%|
|Newmont Mining Corp||NEM||Metals & Mining||106%|
|Spectra Energy Corp||SE||Oil, Gas & Consumable Fuels||82%|
|Freeport-McMoRan Inc||FCX||Metals & Mining||65%|
|Applied Materials Inc||AMAT||Semiconductors & Semiconductor||58%|
|Hewlett Packard Enterprise Co||HPE||Technology Hardware, Storage &||49%|
|Urban Outfitters Inc||URBN||Specialty Retail||47%|
|Southwestern Energy Co||SWN||Oil, Gas & Consumable Fuels||46%|
|PVH Corp||PVH||Textiles, Apparel & Luxury Goo||45%|
|Cimarex Energy Co||XEC||Oil, Gas & Consumable Fuels||45%|
|Linear Technology Corp||LLTC||Semiconductors & Semiconductor||44%|
|Pioneer Natural Resources Co||PXD||Oil, Gas & Consumable Fuels||43%|
|F5 Networks Inc||FFIV||Communications Equipment||43%|
|Quanta Services Inc||PWR||Construction & Engineering||42%|
|QUALCOMM Inc||QCOM||Semiconductors & Semiconductor||41%|
|Kinder Morgan Inc/DE||KMI||Oil, Gas & Consumable Fuels||41%|
|Time Warner Inc||TWX||Media||40%|