The 10 Best Stocks of the Bull Market
The bull market that began nearly five years ago now ranks as
the fifth-best of the 13 major advances since 1930.
From the market's bottom on March 9, 2009, through March 5,
2014, Standard & Poor's 500-stock index has returned an
annualized 25.3%. In cumulative returns, an investment in the
S&P 500 has gained more than 200% when dividends are
But some stocks can measure their percentage gains in the
thousands. How could that be? Because in the late winter of 2009,
the fear gripping the stock market was so intense that even
shares of many big-name companies were selling for a few dollars,
or sometimes just pennies. They were in effect priced for
Armageddon. Investors who had the guts to jump in at that point
wound up with massive gains, provided they held on.
We wanted to find out which stocks have done best since the
onset of the bull market and see what lessons could be drawn from
them. So we asked Morningstar to cull its universe for the ten
best performers, measured by total return, from March 9, 2009,
through February 21, 2014. We limited the list to companies based
in the U.S. and to those with market capitalizations today of at
least $1 billion.
Join us for the countdown to number one.
10. Las Vegas Sands
Five-year total return: 6,222% (131% annualized)
52-week price range: $47.95-$88.28
Price-earnings ratio: 23
Market capitalization: $71 billion
Apart from the banks, few stock crashes in 2007 and 2008 were
more dramatic than what befell casino titan Las Vegas Sands (
). As financial markets seized up and the global economy
shuddered, the company's shares plummeted from $144 to a low of
$1.28, a wipeout of 99%.
Wall Street feared not only a sustained tourist slump in Las
Vegas, where Las Vegas Sands owns the Venetian and Palazzo
hotel/casinos, but also a sudden dearth of high-rollers in
China's gambling center, Macau. There, the company owns the huge
Venetian Macao, opened in 2007, and other resorts. What's more,
Sheldon Adelson, the 80-year-old head of Las Vegas Sands, was
pushing ahead in 2008 with a $5.7-billion casino resort in
But as usual with the feisty Adelson, luck was on his side --
and with anyone who took a chance on the stock when it traded in
penny-stock territory. The company made it through the financial
crisis intact, then came roaring back as the global economy
steadied. Revenue and earnings both hit records last year, at
$13.8 billion and $2.3 billion, respectively. The stock, at 23
times estimated 2014 earnings, isn't cheap. But as Steven
Wieczynski, an analyst at Stifel Financial writes, if the shares
appear "priced for perfection, we would counter that recent
quarterly results have been just that, and then some."
Bottom line: Adelson takes big risks, but the payoffs have
been enormous -- though not yet for people who chased the stock
at its 2007 peak.
9. Atlas Energy LP
Five-year total return: 6,433% (132% annualized)
52-week price range: $40.52-$55.89
Price-earnings ratio: Not meaningful
Market capitalization: $2.2 billion
Atlas Energy (
) is a publicly traded master limited partnership that was dumped
mercilessly in the commodity bust of 2008. By the time the stock
market bottomed in March 2009, the firm's units could be had for
65 cents each.
Pittsburgh-based Atlas owns controlling stakes in two other
partnerships: Atlas Resource Partners, which explores for and
produces oil and natural gas; and Atlas Pipeline Partners, a gas
distributor. Those two businesses operate from Appalachia to New
Mexico and have been players in the new U.S energy boom.
Total revenue from the Atlas businesses reached $2.6 billion
last year, up from $1.5 billion in 2012, thanks in part to
acquisitions. Atlas Energy CEO Edward Cohen called 2013 a good
year and says he expects 2014 to be "even better." As for cash
distributions to investors -- the primary reason investors buy
energy partnerships -- Atlas Energy says it expects to pay out
between $1.95 and $2.45 per unit in 2014. That would mean a
distribution yield of between 4.6% and 5.8% at the latest market
Bottom line: An income-generating domestic energy play, but
you should discuss MLPs with your tax adviser before
8. American Axle
Five-year total return: 6,645% (134% annualized)
52-week price range: $11.85-$21.48
Price-earnings ratio: 8
Market capitalization: $1.5 billion
American Axle (
) partly suffered guilt by association in the 2007-09 bear market
as the car business tanked. But the threat to American Axle's
survival turned out to be very real: After its main customer and
former parent, General Motors, filed for bankruptcy protection in
June 2009, American Axle teetered on the brink -- only to be
rescued by GM, which provided a $110-million capital infusion in
American Axle returned to profitability in the third quarter
of 2009, and its shares, which had sunk to a mere 29 cents at the
bottom of the bear market, boomeranged back above $10 by early
2010. With the auto industry's continued recovery, the Detroit
company's global sales of axles, transmission parts and other
driveline components hit $3.2 billion last year, more than double
2009 levels. Operating income reached $240 million, the highest
in nine years.
But what Wall Street seems to like most is that American Axle
is further weaning itself from its dependence on GM, which spun
out the business in 1994. Sales to other companies accounted for
29% of American Axle's total last year, up from 25% in 2010. And
the company continues to expand rapidly in key foreign markets,
including Brazil, China and India.
Bottom line: A cheap way to play the auto industry's global
growth. But keep an eye on the company's debt level.
Five-year total return: 7,885% (142% annualized)
52-week price range: $9.26-$34.85
Price-earnings ratio: 35*
Market capitalization: $1.2 billion
A new wave of dot-com stocks has captivated Wall Street over
the past year, yet few can match the recent performance of CalAmp
), a little-known, 33-year-old maker of telecom equipment.
The Oxnard, Cal., company has been riding a surge in demand
for wireless-telecom applications, such as improved
package-delivery monitoring, "M2M" (machine-to-machine) systems
that control the movement of trains, and emergency-response
coordination by government units. Analysts see revenue hitting
$280 million in the fiscal year that ends next February, up from
$139 million two years ago. Earnings are expected to be $1.05 a
share this year, up from 18 cents two years ago.
Although the stock has responded in kind and then some,
CalAmp's history may give investors pause. The shares also
briefly spiked in the late 1990s and again at the tech zenith in
the early 2000s, topping $40 both times -- only to crash. But
back then CalAmp was primarily a supplier of home satellite TV
dishes. Now 80% of sales are in wireless equipment. FBR Capital
Markets analyst Scott Thompson thinks CalAmp's wireless-growth
prospects remain outstanding, with one caveat: If bigger players
were to barrel into its markets, they could drive down product
prices and potentially wreck CalAmp's profitability, he says.
With the stock at a rich 35 times estimated earnings, there's no
margin for disappointment.
Bottom line: Great little niche growth company, but high risk
at these valuations.
*Based on estimated earnings for the four quarters that end
6. Nexstar Broadcasting Group
Five-year total return: 8,389% (145% annualized)
52-week price range:$15.82-$56.42
Price-earnings ratio: 14
Market capitalization: $1.3 billion
One key to Nexstar's success has been the lucrative
retransmission fees that cable companies pay to carry local TV
stations. To complement his stations, Sook also has developed
community news Web sites that stress local news. And while media
empires often stress the value of their assets as an investor lure,
Nexstar is offering cash back, too: The company in January
announced a 25% boost in its quarterly dividend, to 15 cents a
Bottom line: A great collection of valuable local broadcast
outlets to buy on any pullback.
5. Dana Holding
Five-year total return: 10,834% (158% annualized)
52-week price range:$15.51-$23.46
Price-earnings ratio: 12
Market capitalization: $3.3 billion
) was the proverbial baby thrown out with the bathwater in 2009.
Many frightened investors figured that the Maumee, Ohio,
auto-parts maker -- newly restructured in 2007 -- would quickly
follow the car makers into insolvency.
It was a bad bet: Though Dana lost $431 million in 2009 as
sales crumbled, it was profitable again in 2010. The stock
recovered quickly from a low of 20 cents in 2009 to about $17 by
year-end 2010. That accounted for most of the advance that
propelled Dana to the number-five spot on our bull market
But since 2010, the stock is up a modest 26%. Dana's revenue
fell to $6.8 billion in 2013, down 6% from the previous year.
Weaker North American sales of big trucks and other heavy
equipment trimmed demand for the axles, steering shafts and other
driveline components that Dana supplies, and depreciating
currencies hurt results in foreign markets, including South
America. The company projects flat revenue this year and expects
operating earnings to inch up to between $1.82 and $1.86 a share,
compared with $1.77 last year. In short, there's not much
excitement here in the near term.
Bottom line: Needs a stronger global economy to lure
investors. The modest 0.9% dividend yield isn't enough to attract
4. Avis Budget Group
Five-year total return: 11,711% (162% annualized)
52-week price range:$25.12-$48.97
Price-earnings ratio: 18
Market capitalization: $5.2 billion
The financial collapse of General Motors and Chrysler in 2009
caused investors to toss almost everything connected to the auto
business onto the same junk heap. That included car rental giant
Avis Budget Group (
), which saw its shares plummet to 38 cents in March 2009.
But like many companies ravaged by the 2007-09 recession, Avis
quickly hacked expenses to deal with shrinking revenue. By 2010,
sales began to recover, the company was profitable again, and the
stock was back above $10. It helped that Parsippany, N.J.-based
Avis and other rental firms slashed the size of their fleets,
creating car shortages that forced up rental rates.
After pulling back in 2011, Avis shares have been red-hot
again over the past two years as revenue has surged (reaching $8
billion last year) with rebounding leisure and business travel --
and as the rental giants have continued to raise rates. That's a
side effect of the massive industry consolidation over the past
decade that left the Big Three rental firms -- Enterprise, Hertz
and Avis -- with a stunning 95% of the market. Christopher Agnew,
who covers Avis for MKM Partners, expects earnings of $2.77 a
share this year, rising 35% to $3.73 in 2015, and calls Avis his
"highest conviction idea."
Bottom line: Still feels like a long-term bargain, assuming
the now-concentrated industry maintains its pricing power.
3. Pier 1 Imports
Five-year total return: 12,966% (167% annualized)
52-week price range:$18.05-$25.29
Price-earnings ratio: 17*
Market capitalization: $2.0 billion
Many investors in early 2009 feared an economic collapse was
imminent. And in the stock market, plenty of companies were
priced accordingly: near zero. One was home-furnishings retailer
Pier 1 Imports (
), which traded for a mere 15 cents at the market bottom.
The Fort Worth, Tex., company already was in trouble heading
into the Great Recession, as revenue began to slide in 2005 and
losses mounted. Things got worse when housing collapsed. But Pier
1 CEO Alex Smith, who arrived in 2007, saw a way back from the
brink: Slash payroll costs, close marginal stores, eliminate debt
and refocus on finding one-of-a-kind merchandise. His strategy
worked: By 2010, the company was profitable again. The stock
rebounded to $5 by the end of 2009 and $10 by the end of 2010.
Results have continued to improve: In the nine months that ended
November 30, sales were up 9%, to $1.26 billion, from the same
period a year earlier, and operating profit rose 7%, to $105.4
But like many retailers, Pier 1 posted disappointing 2013
holiday and post-holiday sales, which the 1,000-store chain
blamed partly on wild weather late last year and early this year.
As a result of the recent sales shortfall, the stock has declined
24% from its 52-week high. Analyst Joan Storms, of Wedbush
Securities, advises buying the shares on this weakness. She
thinks Pier 1 is capable of 15% annual earnings growth over the
next few years, helped by an aggressive new online-shopping push.
A plus is that the company remains nearly debt-free.
2. Keryx Biopharmaceuticals
Five-year total return: 13,533% (170% annualized)
52-week price range:$6.61-$17.07
Price-earnings ratio: Not meaningful
Market capitalization: $1.4 billion
Much of the huge gain by Keryx (
) has come in the past 15 months. The catalyst: optimism about
the New York City firm's new drug, Zerenex, a treatment for side
effects of chronic kidney disease.
Japanese regulators approved Zerenex in January. The company,
founded in 1998, is hoping for U.S. approval in June. Wall Street
analysts project that the drug's market launch will push Keryx's
revenue to $57 million this year, from $9 million in 2013. Keryx
is expected to lose about 25 cents a share in 2014, but that
would be about half of last year's loss.
Some investors worry that Keryx hasn't announced a partnering
deal with a major U.S. operator of dialysis centers. The fear is
that the company may lack the resources to launch Zerenex alone
and to go up against competing treatments already on the market.
Keryx in January raised $90 million by issuing more stock, but
that further diluted the stakes of existing shareholders. The
analyst community, however, isn't flinching: Of the ten Wall
Street analysts who follow the stock, every one has a "buy"
rating on it. One of them is Oppenheimer & Co.'s Boris
Peaker. He expects the company to attract a new round of positive
attention when detailed Japanese studies of Zerenex are
published, possibly soon.
Bottom line: Too much uncertainty for all but the gutsiest
Five-year total return: 19,213% (189% annualized)
52-week price range:$71.85-$154.89
Price-earnings ratio: Not meaningful
Market capitalization: $10.4 billion
Biotechnology has been one of the hottest sectors for the past
two years, and no stock shows that better than Pharmacyclics (
), which takes the crown as the biggest winner of the
five-year-old bull market. A $1,000 investment in the Sunnyvale,
Cal., company's shares at the market's bottom in March 2009 is
worth a stunning $177,557 today.
The buzz began to build in 2011 for Pharmacyclics's drug
Imbruvica, a new treatment for blood cancers such as leukemia.
The company that year signed a deal with Johnson & Johnson to
develop and market the drug. Last November, the two firms got
Food and Drug Administration approval to start selling Imbruvica
for a rare blood cancer. In February, the FDA approved the drug
for a more common leukemia. Sales have already surged, and
analysts on average expect Pharmacyclics's revenues to jump from
$260 million in 2013 to $405 million this year and $778 million
in 2015. They expect earnings at 8 cents a share this year, then
see profits surging to 65 cents a share in 2015.
The real excitement is about broader future uses for Imbruvica
in cancer treatment. That's what is driving analysts' extremely
bullish outlook for the 23-year-old firm. Robyn Karnauskas, of
Deutsche Bank Securities, sees revenues of $4 billion and
earnings of $15.66 a share by 2018 and sees the stock at $180 in
12 months. But as the past year has shown, a major challenge for
long-term believers in Pharmacyclics is dealing with wild
short-term trading in the stock.
Bottom line: Likely to stay a hot stock, but suitable for big
risk takers only. How patient can you be?
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