Investing

5 Top (and Bottom) Performers in 2019 Among the S&P 500

The S&P 500 Index has risen by more than 28% in 2019. Of the 10 most heavily weighted shares in the index, none was among the best or worst performers for the full year. Apple Inc. (NASDAQ: AAPL) is the second-most heavily weighted stock in the index (approximately 4.51%) and was the year’s 11th-best performing stock. The index is a float-adjusted, market-cap weighted index.

The Dow Jones industrial average index is up by about 22% for the year, while the Nasdaq Composite is up by more than 34%. About half the gains went to make up for the major dive the markets suffered in the last half of 2018, a drop that bottomed out in mid-December.

The tech sector was the year’s best performer while energy was the worst. Three tech stocks sit atop the ranking of the S&P 500’s best performers, and one energy stock is among the worst.

These five stocks were the S&P 500’s best performers this year.

Chipotle Mexican Grill

This fast-food store seemed to be on the ropes after a spate of food poisoning incidents at its restaurants in 2017 and into 2018. A new CEO was hired in March of 2018, and Chipotle Mexican Grill Inc. (NYSE: CMG) began to focus on what people wanted: food delivery and more menu options. Chipotle’s operating cash flow is up more than 40% and free cash flow is up nearly that much. Investors like the sound of cash, as shares added nearly 94% in 2019. At Monday’s closing price of $836.07 and with a price target of $852.57, the stock heads into 2020 with an implied upside of about 2%.

Target

Comparable-store sales rose by 4.5% year over year in the big-box retailer’s third quarter, and Target Corp. (NYSE: TGT) guided fourth-quarter comps to rise by 3% to 4%. That was probably conservative given the strength of the holiday shopping season. The firm has spent money on renovating stores and that has helped keep traffic and sales up. Target stock nearly doubled in 2019, rising by 95%. Shares closed Monday at $128.89. With a price target of $136.21, the implied upside going into the new year is about 5.7%.

KLA

KLA Corp. (NASDAQ: KLAC) makes the machines that make semiconductor chips. The expected demand increase for 5G chips, semiconductors to hook into the Internet of Things and demand for sheer processing power to slice and dice all the data companies can now collect has boosted KLA shares by 99.3% in 2019. An analyst downgrade from Buy to Sell in late November cut 10% from the share price, but it has fully recovered to close Monday at $178.37. The price target is $187.13, yielding an implied upside of 4.9% in the shares.

Lam Research

Another maker of chip manufacturing equipment, Lam Research Corp. (NASDAQ: LRCX) gets about two-thirds of its revenue from memory chip makers, primarily non-volatile (NAND) and DRAM memory. The market for both has improved, and that improvement is expected to continue into next year. Did we mention 5G? Smartphones will need more memory too. Shares more than doubled in 2019, up nearly 115%. The stock closed Monday at $292.54 and has a consensus price target of $274.05. Is it overvalued or are analysts just asleep at the switch going into the new year?

AMD

The best performing stock of 2019, Advanced Micro Devices Inc. (NASDAQ: AMD) added 146.6% to its share price this year. In addition to its server and PC chips, the company designs and manufactures a number of graphics chips that are also in high demand. In its third quarter, the company reported its highest revenue total since 2005 and its highest gross margin on sales since 2012. Shares closed at $45.52 on Monday, against a price target of $37.77. Again, is the stock overvalued or what?