Best And Worst-Performing Stocks In The S&P 500 Over The Last 20 Years And How They Have Performed In 2018

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Includes: AAL, AAPL, ABMD, ADBE, AES, AIG, AKAM, ALXN, AMZN, ANET, ANSS, ATVI, BAC, BIIB, BLK, C, CBS, CELG, CPB, CPRT, CTSH, ERUS, F, FITB, GE, GILD, GS, GT, HBAN, HFC, IPG, JPM, KEY, KSU, L, MAT, MNST, MO, MS, NWL, RF, RSX, SPY, TSCO, UNH, UNM, WFC, XLE, XLF, XLI, XLK, XLP, XLU, XLV, XLY, XRX
by: The Fortune Teller
Summary

It's hard to believe but only ten stocks that are part of the S&P 500 index posted negative returns over the last 20 years.

A total return of over 5500% is a must in order to be one of the best 20 performing stocks of the S&P 500 over the last 20 years.

Surprisingly, the financial services sector is contributing the largest number of names to the worst-20 list.

Unsurprisingly, the technology sector contributing the largest number of names to the best-20 list. However, it's not alone on the lead.

The "Rich Get Richer" S&P 500 version.

Background

Twenty years ago, on August 17th, 1998 to be precise, a financial crisis hit Russia (RSX, ERUS). It resulted in the Russian government and the Russian Central Bank devaluing the ruble and defaulting on its debt.

The Russian crisis of 1998 happened only one year after the Asian financial crisis, that began in July 1997, gripped much of East Asia.

Both crises had severe impacts on many economies (especially of neighboring countries) and raised fears of a worldwide economic meltdown due to financial contagion.

Twenty years later, and it's interesting to see how the US main index - the S&P 500 (SPY) has performed. It's safe to say that these crises left no scars...

Chart SPY Total Return Price data by YCharts

Nonetheless, the over 300% total return of the SPY isn't anywhere as interesting (or shocking, depends how you look at it) as the performance of the leading S&P 500 constituents. For best and for worst.

Best-performing stocks in the S&P 500 over the last 20 years

Let's start with the best-performing stocks in the S&P 500 over the last 20 years:

Best performing stocks in the S&P 500 over the last 20 years The data of the best-20 list reveal few interesting observations:

1. As one would expect, the technology (XLK) sector is leading the best-performing list, contributing six names to the mix:

  • Cognizant Technology Solutions Corp. (CTSH)
  • Apple Inc. (AAPL)
  • Ansys Inc. (ANSS)
  • Activision Blizzard Inc. (ATVI)
  • Arista Networks Inc. (ANET)
  • Adobe Systems Inc. (ADBE)

2. The healthcare (XLV) sector is tied-up at first place, contributing six names of its own to the mix:

  • Celgene Corp. (CELG)
  • Biogen Inc. (BIIB)
  • Gilead Sciences Inc. (GILD)
  • Abiomed Inc. (ABMD)
  • UnitedHealth Group Inc. (UNH)
  • Alexion Pharmaceuticals Inc. (ALXN)

3. The "consuming sectors" sent five names into the top-20 list, out of which consumer cyclical/discretionary (XLY) is accounting for three - Tractor Supply Co. (TSCO), Amazon.com Inc. (AMZN), Copart Inc. (CPRT) - and consumer defensive/staples (XLP) responsible for two - Monster Beverage Corp. (MNST), Altria Group Inc. (MO).

4. The remaining three names that are part of the top-performing list belong to three different sectors:

  • BlackRock Inc. (BLK) representing the Financial services (XLF) sector
  • HollyFrontier Corp. (HFC) representing the Energy (XLE) sector
  • Kansas City Southern (KSU) representing the Industrials (XLI) sector

Best performing stocks in the S&P 500 in 2018

Interestingly, when one is looking at the 2018 performance of these 20 stocks, the conclusion is that most of the long-term leaders remain short-term leaders.

16 out of the 20 names, or 80%, have delivered positive YTD total returns. The four stocks that posted negative total return thus far in 2018 are BLK, MNST, MO and CELG.

The average total return YTD of the best performing stocks in the S&P 500 over the last 20 years is 23.07%.

Splitting this list into two groups shows that the top-10 YTD, out of the top-20 over the past 20 years, are ABMD, AMZN, ADBE, HFC, AAPL, ATVI, ANSS, TSCO, UNH, CPRT.

This group has delivered a stunning YTD average total return of 44.50%!

top 10 in 2018 our of top 20 over past 20 years

On the other hand, the bottom-10 YTD, out of the top-20 over the past 20 years, are ANET, KSU, CTSH, ALXN, BIIB, GILD, BLK, MNST, MO, CELG.

This group has delivered a disappointing, albeit positive, YTD average total return of only 1.64%.

worst 10 in 2018 our of top 20 over past 20 years

Worst performing stocks in the S&P 500 over the last 20 years

Now, let's move to the opposite side, taking a closer look at the worst performing stocks in the S&P 500 over the last 20 years:

Worst performing stocks in the S&P 500 over the last 20 years

The data of the best-20 list reveal few interesting observations:

1. The healthcare (XLV) sector that sent six names into the top-20 list has no representation in the worst-20 list. Says a lot about this stable-defensive sector over the long-term.

2. Contrary to that, the technology (XLK) sector that also sent six names into the top-20 list has two representatives in the worst-20 list - Akamai Technologies Inc. (AKAM) and Xerox Corp. (XRX). Positive overall but still mixed feelings.

3. Financial services (XLF) accounts for no less than eight names out of the twenty worst performing stocks in the S&P 500 over the last 20 years :

  • American International Group Inc. (AIG)
  • Citigroup Inc. (C)
  • Loews Corp. (L)
  • Regions Financial Corp. (RF)
  • Fifth Third Bancorp (FITB)
  • Unum Group (UNM)
  • KeyCorp (KEY)
  • Huntington Bancshares Inc. (HBAN)

Certainly not making a convincing pitch for the sector. Nevertheless, since we are long few major banks ourselves, it's important to note that JPMorgan Chase & Co. (JPM), Bank of America Corporation (BAC), Citigroup Inc. (C) and Wells Fargo & Co. (WFC) have served investors very since S&P 500 (SPY) hit the bottom 666 level on 3/9/2009, caused by the subprime crisis.

The former investment banks, Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS), haven't performed that well but with a total return of 230-250% over 9.5 years - investors can't and shouldn't feel disappointed.

Chart JPM Total Return Price data by YCharts

4. The "consuming sectors" sent seven names into the top-20 list, out of which consumer cyclical/discretionary (XLY) is accounting for five - Goodyear Tire & Rubber Co. (GT), Ford Motor Co. (F), Mattel Inc. (MAT), The Interpublic Group of Companies Inc. (IPG), CBS Corp. (CBS) - and consumer defensive/staples (XLP) responsible for two - Newell Brands Inc. (NWL), Campbell Soup Co. (CPB).

5. The remaining three names that are part of the worst-performing list belong to two sectors:

  • American Airlines Group Inc. (AAL) and General Electric Co. (GE) representing the Industrials (XLI) sector
  • The AES Corp (AES) representing the Utilities (XLU) sector

Worst performing stocks in the S&P 500 in 2018

Interestingly, when one is looking at the 2018 performance of these twenty stocks, the conclusion is that most of the long-term laggards remain short-term laggards.

12 out of the 20, or 60%, names have delivered negative YTD total returns. The eight stocks that posted positive total return thus far in 2018 are AES, IPG, RF, AKAM, HBAN, MAT, KEY, L.

The average total return YTD of the worst performing stocks in the S&P 500 over the last 20 years is -5.34%. Yes, you got it right; no mistake here!
While the SPY is up exactly 10% YTD (on a total return basis), these 20 stocks - that have been the worst holdings among the S&P 500 over the past twenty years - aren't doing much better in 2018 either.

Splitting this list into two groups shows that the worst-10 YTD, out of the worst-20 over the past 20 years, are FITB, XRX, AIG, CPB, AAL, F, GT, UNM, NWL, GE.

This group has delivered an awful YTD average total return of -19.26%. This means that this group of 10 stocks is underperforming its benchmark by circa 30% YTD!

worst 10 YTD performers out of worst 20 year performers

On the other hand, the top-10 YTD, out of the worst-20 over the past 20 years, are AES, IPG, RF, AKAM, HBAN, MAT, KEY, L, C, CBS.

This group has delivered a reasonable YTD average total return of 8.58%. Still behind the benchmark but not something an investor can't live peacefully with.

top 10 YTD performers out of worst 20 year performers

What have we learned?

1. Long-term leaders are also short-term leaders.

2. Long-term laggards are also short-term laggards.

3. CELG, MO and MNST are the only stocks - out of the 40 stocks we covered in this article - that appear on the "best performing stocks in the S&P 500 over the last 20 years" list as well as on the "worst-10 performing YTD" list.

4. AES is the only stock - out of the 40 stocks we covered in this article - that appear on the "worst performing stocks in the S&P 500 over the last 20 years" list as well as on the "best-10 performing YTD" list.

5. Healthcare stands out as a very stable, reliable and consistent sector. Technology isn't far behind although not as much. It's safe to assume that much of the positive image/ranking of the technology sector is a result of recent years, i.e. the long-term data is skewed by short-to-medium term data.

6. The mirror image of the technology sector is the financial services sector. For the latter, it's safe to assume that much of the negative data/ranking is a result of past-old years, i.e. the long-term data is skewed by 2008/9.

7. Consumer cyclical/discretionary and consumer defensive/staples sectors are "shooting" all over the place, sending more than a handful of representatives into both "best" and "worst" lists.

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Disclosure: I am/we are long JPM, C, BAC, MS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.