The 8 biggest stock gift surprises of 2015
Investors don't usually like big surprises - unless they make them richer. So unwrapping these stock market gifts has been a joy.
There are eight stocks in the Standard & Poor's 500 index, including cable operator Cablevision (CVC), video-game maker Electronic Arts (EA) and auto-parts seller O'Reilly Automotive (ORLY), that have been an unexpected treat for investors this year, according to a Paste BN analysis of data from S&P Capital IQ. These stocks are among the best 30 stocks in the S&P 500 this year, even though analysts at the start of the year on average thought they'd be dogs and lose decline in value.
It's been a bit of a disappointment of a year for most investors - with the S&P 500 gaining just 0.7% - or a fraction of its 10% average annual long-term return. Even if you add the market's 2% dividend yield, a 2.7% return from the market this year is only a quarter of what the market has generated over the long term.
But when there's disappointment all around, that makes positive surprises all that more pleasing - especially when investors were expecting a lump of coal.
Take Cablevision, one of the largest cable operators in the country. The stock started the year with an average rating of "hold" from Wall Street analysts, which in reality, means sell since so few stocks are rated that low. Analysts thought the stock would be worth 7.6% less in 18 months than the $20.64 a share it started the year at. But there's nothing a $34.90-a-share buyout couldn't solve. Shares of Cablevision actually soared 50.1% this year after it agreed to be bought by the Netherlands' Altice.
Rewind to the beginning of 2015. Video-game consoles were supposed to be dead, rbecause we'd all be playing games on our smartphones. Electronic Arts - one of the biggest makers of video games for consoles - was expected to see its stock be worth 4.2% less in 18 months than it was trading for at the beginning of the year. But while Wall Street was bearish on Electronic Arts, no one told the gamers lined up to buy EA games. EA's revenue over the past 12 months is up 21% from fiscal 2014 ended in March. Net income has skyrocketed from $8 million in fiscal 2014 to $839 million. And the stock - it's up 51.1% this year.
Car parts seller O'Reilly Automotive has also run over its doubters. Shares of the stock are up 32.2% this year, which is a remarkable showing considering analysts thought it would be 2.7% lower over the following 18 months. Revenue and profit growth have been strong at O'Reilly as consumers keep their cars running longer. Revenue over the past 12 months is up 8% from 2014 and net income is up 15%. It doesn't hurt that O'Reilly has beaten adjusted earnings forecasts for the past 17 straight quarters, says S&P Capital IQ.
Its seems that some investors don't have to wait until next week to open their gifts. The cash is already sitting in their accounts.
BIGGEST SURPRISES THIS YEAR IN S&P 500
Stocks that were among the top 30 top performers this year - despite analysts on average expecting them in January to fall over the next 18 months
Company, Symbol, Expected stock ch.*, Actual YTD % Ch.
Cablevision, CVC, -7.6%, 50.1%
Electronic Arts, EA, -4.2%, 51.1%
O'Reilly Automotive, ORLY, -2.7%, 32.2%
Reynolds American, RAI, -2%, 42.4%
VeriSign, VRSN, -1.2%, 56.5%
Regeneron Pharmaceuticals, REGN, -1%, 35.2%
Public Storage, PSA, -0.5%, 35.2%
Equifax, EFX, -0.4%, 38.1%
Source: S&P Capital IQ, Paste BN
* Implied stock change expected based on analysts' average 18-month price targets