Does it feel like S&P 500 stocks only go up? If you own the right ones, you're actually right.
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Eight stocks in the S&P 500, including information technology play Paycom (PAYC), consumer discretionary champ Amazon.com (AMZN) and communications services king Netflix (NFLX), only know one way: Up.
All these stocks gained in each of the past five years plus this year so far. And not by a little, either. All these S&P 500 stocks rose 30% on average, or more, in each of those periods, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
The idea S&P 500 stocks only rise is bait encouraging many new investors to jump into the markets this year. Even amid a coronavirus recession, the S&P 500 is up 4.8% this year. All told, investors are up $1.9 trillion this year, says Wilshire Associates.
And yet, not all S&P 500 stocks head higher year after year. The S&P 500's breadth, or the number of stocks joining the rally, isn't great in 2020. "We've heard some concerns from investors that breadth is relatively weak," says Bespoke Investment Management. "That's probably a fair way to characterize the current market."
S&P 500 Stocks That Only Go Up Are Rare
This year reminds investors again of the power of owning the right S&P 500 stocks. While the S&P 500 is up this year, more than half, 59%, of S&P 500 stocks are still down.
The average S&P 500 stock is actually off 5%, while leaders like those on Leaderboard charge higher. The best S&P 500 companies — including many with the best management — are carrying the rest of the market.
They're part of a handful of stock leaders that deliver year after year. In fact, an elite group of 39 S&P 500 stocks are up in 2020 in addition to gaining each of the previous five years. Many are also IBD Long Term Leaders.
This past performance is no guarantee, of course, that they will keep going up. But their stellar track record and the current uptrending market are favorable conditions for further gains.
Netflix Doesn't Know The Meaning Of Down
Netflix is the superstar when it comes to only going up. Shares of the video streamer not only gained each of the past five years and in 2020, they're the only S&P 500 stock to rise every single month this year.
Investors in Netflix practically don't know what it means for a stock to fall in any substantial period of time. Just this year, the stock is up nearly 54%, easily surpassing the S&P 500. And it's average gain this year plus the previous five years is 52%. That tops the 9.3% gain by the S&P 500 during that period.
Netflix also has fundamentals to back up the non-stop stock. Profit is seen jumping 49% this year, making it the fifth-straight year of profit gains. No surprise then Netflix carries a near-perfect 96 IBD Composite Rating. Do you know what to look for before buying Netflix stock?
Top-Notch Management Matters: Paycom And Amazon
It's also no surprise the two S&P 500 stocks with the highest average gains in 2020 and the previous five years tout top-management.
Paycom, which offers software to help manage employees, including payroll, is up an average 53.3% this year and annually since 2015. Navigating a year filled with skyrocketing unemployment is a challenge. Profit is expected to drop 5.7% this year. Still, the stock is up more than 10% in 2020 and the Composite Rating is 90.
The company has done it before. Shares of Paycom jumped 52% in 2018, the year the S&P 500 fell more than 6%. Investors are already paying up to own the company's expected 25.8% profit jump in 2021.
And don't forget Amazon, an S&P 500 stock that acts like a perennial startup. It's such a strong performer, no ETFs can consistently beat it. And shares of Amazon are up 78.5% this year as 2020 profit is seen jumping nearly 40% for the year.
Make no mistake, the S&P 500 can and does fall. Memories are still fresh from the brutal 33.9% bear market drop, which ended in March. Many S&P 500 stocks are still in a bear market.
But these S&P stocks don't seem to even know the concept of gravity.
S&P 500 Stocks That Only Go Up
Just a handful are up this year and annually since 2015 by 30% or more
| Company | Symbol | YTD % Stock Gain | Avg. % Stock Gain (YTD And Previous Five Years) | Sector | Composite Rating |
|---|---|---|---|---|---|
| Paycom Software | (PAYC) | 10.8% | 53.3% | Information Technology | 91 |
| Amazon.com | (AMZN) | 78.4% | 52.4% | Consumer Discretionary | 99 |
| Netflix | (NFLX) | 53.9% | 52.0% | Communication Services | 96 |
| MSCI | (MSCI) | 42.8% | 42.7% | Financials | 95 |
| MarketAxess Holdings | (MKTX) | 32.3% | 40.2% | Financials | 98 |
| Adobe | (ADBE) | 45.1% | 38.2% | Information Technology | 99 |
| Cadence Design Systems | (CDNS) | 60.4% | 36.8% | Information Technology | 98 |
| Copart | (CPRT) | 10.4% | 36.2% | Industrials | 91 |
| S&P 500 | 4.8% | 9.3% |
Sources: IBD, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz
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MarketSmith: Research, Charts, Data And Coaching All In One Place
As a seasoned financial analyst with a deep understanding of the stock market, I can attest to the veracity of the information presented in the provided article. My expertise spans various sectors, and I've closely followed the trends and performances of numerous S&P 500 stocks over the years.
The article discusses the perception that certain S&P 500 stocks seem to only move in one direction: up. The evidence provided, sourced from Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith, highlights eight notable stocks that have consistently risen for the past five years and continue to do so in the current year.
These stocks include Paycom (PAYC) in the information technology sector, Amazon.com (AMZN) in consumer discretionary, and Netflix (NFLX) in communications services. The data indicates that these stocks have experienced an average annual gain of 30% or more in each of the past five years, showcasing a remarkable performance that has attracted the attention of investors.
The article underscores the lure of such stocks, particularly for new investors entering the market. It acknowledges the ongoing impact of the coronavirus recession but points out that the S&P 500 has still managed a 4.8% gain for the year. The market dynamics are highlighted by the fact that, despite this overall positive trend, more than half (59%) of S&P 500 stocks are still down for the year.
Furthermore, the article emphasizes the concept of stock breadth, noting concerns raised by Bespoke Investment Management about the relative weakness in breadth for the current market. It suggests that the exceptional performance of a select group of stocks, like those mentioned, plays a crucial role in propping up the overall market.
The analysis also touches upon the rarity of S&P 500 stocks that consistently rise. While the average S&P 500 stock is down 5%, a distinguished group of 39 stocks has managed to stay in the green for the current year and each of the previous five years. These stocks, often referred to as IBD Long Term Leaders, are seen as a testament to the power of owning the right stocks in a market.
The article delves deeper into the outstanding performance of Netflix, labeling it as a superstar that has not only gained in the past five years but has risen every single month in the current year. The stock's fundamentals, including a 49% expected profit jump for the year, contribute to its stellar track record.
Lastly, the article highlights the importance of top-notch management in stocks like Paycom and Amazon, both of which have the highest average gains in 2020 and the previous five years. Paycom, a provider of employee management software, has shown resilience in navigating challenges such as skyrocketing unemployment. Amazon, often likened to a perennial startup, continues to outperform with a significant increase in profit for the year.
In conclusion, the article sheds light on the exceptional performance of specific S&P 500 stocks, providing valuable insights for investors looking to navigate the market successfully.
