Whether These Top Performing S&P Stocks Can Make More Gains In 2011

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Includes: CMG, COG, LO, MA, NSM, TXN
by: Hawkinvest

It hasn't been a great year for stocks. This year started out well but after a market rout in August many stocks are trading close to their 52 week lows. In spite of a major market correction, some stocks have been able to advance sharply and post gains that far exceed the expectations of even top money managers. A new article from TheStreet.com points out "The S&P 500, the benchmark for equity investments in the U.S., is now down almost 8 percent in 2011 after two years of strong gains." Read the entire article here.

This article goes on to list some of the top performing stocks in the S&P Index for 2011. It makes sense to evaluate which companies and sectors are beating the market averages as this may give clues for the rest of the year on which stocks to take profits on or make new purchases in. Here is a closer look at the stocks that have vastly outperformed the average stock, however after larger than life gains, they could be laggards going forward:

Chipotle Mexican Grill (NYSE:CMG) operates a number of restaurants that offer high quality and affordable Mexican foods. This stock has been a market leader but the price to earnings ratio of about 42, is so much higher than almost any other stock in this market that I can't even get close to considering a buy, unless the stock fell under $200. If this company were to miss earnings, the stock could drop hard so it's too risky for me. At this price level, I believe there is too much risk and not enough reward for a restaurant chain. I doubt CMG shares can keep running as it has for the rest of the year. According to Thestreet.com, this stock has returned about 36% this year.

Here are some key points for CMG:

  • Current share price: $296.46
  • The 52 week range is $142.82 to $337.32
  • Earnings estimates for 2011: $6.82 per share
  • Earnings estimates for 2012: $8.64 per share
  • Annual dividend: none

Lorillard (NYSE:LO) is a leading maker of cigarettes including brands like Newport, Kent, and Maverick. According to Thestreet.com, this stock has returned about 37% this year. The market correction and continued volatility has made many investors seek dividend stocks like Lorillard, but if the markets rebound later this year, dividend stocks might be laggards.

Here are some key points for LO:

  • Current share price: $111.59
  • The 52 week range is $72.40 to $116.90
  • Earnings estimates for 2011: $7.72 per share
  • Earnings estimates for 2012: $8.53 per share
  • Annual dividend: $5.20 per share which yields 4.6%

MasterCard (NYSE:MA) is a leading payment transaction processing company. It seems like everyone likes this stock including Warren Buffet so it might make sense to take some profits and possibly buy on dips. According to Thestreet.com, this stock has returned about 44% this year.

Here are some key points for MA:

  • Current share price: $328.90
  • The 52 week range is $191 to $340.42
  • Earnings estimates for 2011: $17.72 per share
  • Earnings estimates for 2012: $20.85 per share
  • Annual dividend: 60 cents per share which yields .2%

National Semiconducor (NSM) is a leading maker of semiconductors. National Semiconductor saw a big rise in the stock price when Texas Instruments (NYSE:TXN) offered to acquire the company for $25 per share. With the economy and chip demand likely to drop, it looks like Texas Instruments offered too much. According to Thestreet.com, this stock has returned about 81% this year. I would sell this stock now, why wait for $25 when you can sell now and move on for only 11 cents less than the current offer?

Here are some key points for NSM:

  • Current share price: $24.89
  • The 52 week range is $11.84 to $24.92
  • Earnings estimates for 2011: $1.15 per share
  • Earnings estimates for 2012: $1.30 per share
  • Annual dividend: 40 cents per share which yields 1.6%

Cabot Oil & Gas (NYSE:COG) is an independent oil and gas company engaged in exploration, development and marketing. According to Thestreet.com, this stock has returned about 84% this year. This company has been reporting better than expected results but it looks to expensive now after such a huge run. There are too many other energy stocks with similar earnings per share estimates with much lower stock prices.

Here are some key points for COG:

  • Current share price: $75.65
  • The 52 week range is $26.62 to $78.94
  • Earnings estimates for 2011: $1.46 per share
  • Earnings estimates for 2012: $2.84 per share
  • Annual dividend: 12 cents per share which yields .2%

Data is sourced from Yahoo Finance. No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.