Year 2012 has ended and it's worth looking at the best and worst performers in 2012. This report will look at the major indices, sector performance and the performance of individual stocks.
In 2012, the laggard was the Dow Jones Industrial Average. Both the Standard & Poor's 500 Index and the Nasdaq Composite Index outperformed the Dow by almost 2-to-1. The following percentages represent the total change over the full year.
|Dow Jones Industrial Average (DJIA)||+7.22%|
|Standard & Poor's 500 Index (SPX)||+13.29%|
|Nasdaq Composite Index (COMP)||+13.63%|
The top three sectors in 2012 were financials, consumer discretionary, and transportation. The worst performing sectors in 2012 were consumer staples, energy and utilities. Utilities was the only sector that lost ground in 2012. The following percentages represent the total change over the full year.
|Consumer Discretionary (XLY)||+19.58%|
|Real Estate (IYR)||+12.00%|
|Basic Materials (XLB)||+9.64%|
|Consumer Staples (XLP)||+6.76%|
More about sectors?
The financial and transportation sectors finished strong, both moving up over 3% in December. On the other hand the consumer staples sector was down over 3% in December. Additional sectors losing ground during December included energy, utilities, healthcare and consumer discretionary.
Healthcare, consumer staples and utilities are considered defensive sectors in that they generally provide stable and predictable earnings. Although they don't usually show exceptional growth relative to the market, they do consistently provide dividend payments.
The following chart provides examples of the current dividend yields for the defensive sectors:
|Reynolds American (RAI)||5.69%|
|Altria Group (MO)||5.59%|
|Lorillard Inc. (LO)||5.31%|
|PDL Biopharma (PDLI)||8.52%|
|Astra Zeneca PLC (AZN)||6.02%|
|Glaxo Smithkline PLC (GSK)||5.33%|
|CPFL Energia SA (CPL)||7.06%|
|Exelon Corp (EXC)||7.06%|
|National Grid PLC (NGG)||5.51%|
Ten Best Performing Stocks
The best performing sectors often include the best performing stocks, but that's not always the case. Only one of the financials stocks made it into the top ten and that was Bank of America (BAC). Following are ten of the best performing stocks in 2012 with prices above $5/share.
|LCC||US Airways Group||Transportation||+159%|
|LNG||Cheniere Energy Inc||Energy||+111%|
|BAC||Bank of America||Financials||+101%|
|CAR||Avis Budget Group||Transportation||+78%|
|SHW||Sherwin Williams Co.||Basic Materials||+70%|
|VMED||Virgin Media Inc.||Telecom||+69%|
|EMN||Eastman Chemical Co.||Basic Materials||+69%|
Ten Worst Performing Stocks
Following are ten of the worst performing stocks in 2012 with prices above $5/share. Could there be some opportunities here for contrarian investors?
|NIHD||NI Holdings Inc.||Telecom||-67%|
|ABFS||Arkansas Best Corp.||Transportation||-52%|
|BAS||Basic Energy Services||Energy||-44%|
|CLF||Cliffs Natural Resources||Basic Materials||-40%|
|ATI||Allegheny Technologies||Basic Materials||-39%|
|NOG||Northern Oil & Gas||Energy||-31%|
Where's The Market Going Next?
Uncertainty regarding the economy and the future for the markets was very unsettled until the Senate and the House agreed on terms for a deal to avert the fiscal cliff. President Obama has said he will sign the bill. The news was met with mixed reactions, however, the market responded very positively on Wednesday January 2nd. With less than 1 hour remaining in the trading day Wednesday, all the major indices and all the sectors were up sharply. Where to from here?
- Small businesses are not fully satisfied with the deal that was reached, however, some of the uncertainty with regard to taxes has been resolved, which should help.
- Europe and Asia markets were also up sharply after the news of the agreement.
- The next major political battle will likely be over the debt ceiling. The Treasury has announced that the debt ceiling of $16.4 trillion has already been reached. However, some manipulation in spending is expected to keep the government operations funded for approximately two more months.
- The forecast for U.S. auto sales is bullish with sales expected to exceed 15 million vehicles.
- The Fed's stated plan to print more money is not expected to change. If it continues, more money printing will decrease the value of the dollar. This in turn will decrease the purchasing power of U.S. currency.
- Time will tell whether the excitement over the economy will continue to juice the market. Investors will need to watch the major indices and sector trends closely.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.