Equity markets have been booming since the start of the year. Over the last three months, the S&P 500 benchmark index already returned 12.8%, making it an historically good quarter for equities.
Within this positive sentiment there are individual companies returning even more than the general market.
In this article I will review the outperformers of the last three months and judge the potential for future returns.
Investors had plenty of choice investing in companies with at least $1 billion market capitalization which drastically outperformed the S&P 500.
The absolute winners of the last three months were Lender Processing Services (NYSE:LPS), Manitowoc (NYSE:MTW), Seagate Technology (NASDAQ:STX), Solutia (NYSE:SOA) and Westlake Chemical Corporation (NYSE:WLK).
Any of these names returned between 63 and 69% in a mere 3 months!
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Lender Processing Services
The provider of technology and services to the mortgage industry returned a staggering 66% and yet is only priced at 15 times earnings.
In 2011, this service provider saw its earnings more than half after the worst of the housing crisis is over. Continuous doubts about a housing recovery after a sell-off in the shares in 2011 sparked interest again in Lender Processing Services as bargain hunters pushed up the share price.
This capital goods manufacturer, which focuses on cranes and food service equipment goods, saw a strong recovery in its shares. Shares have already rallied over 150% from their lows of $6 in October 2011, as optimism about the global economy grew after encouraging economic signs and the improved situation in the eurozone.
The designer and manufacturer of disk drives and enterprise applications has seen a very strong performance on the back of strong earnings, a dividend hike and a massive $1 billion repurchase program. This resulted in a 20% share price jump on the last day of January. Despite the rally, investors still stand to receive a 3.7% dividend yield per year.
The global manufacturer of performance materials and specialty chemicals returned a staggering 68% as Eastman Chemical (NYSE:EMN) announced its intention to acquire the company for $22 in cash and 0.12 shares in Eastman Chemical.
Westlake Chemical Corporation
This manufacturer of basic chemicals, polymers and building products returned over 63% this quarter as it proposed to acquire Georgia Gulf Corporation (GGC) for $30 which represented a 51% premium. Shareholders in Westlake applauded the deal and shares rose quickly as the chemical manufacturer also announced a repurchase program and a rosy earnings outlook.
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One thing is for sure. In the next quarter, this list will be totally different. Investors should critically asses their portfolio and not get complacent when the overall market guarantees portfolio returns anyway.
An investor who does his research can still find value especially in some small- and mid capitalization firms in an attempt to earn additional returns in this bull market.