The stock market provides a practical means for many companies, large and small, to raise capital. It is also a way for individual investors to profit tremendously — if they pick the right stocks.
Each year, share prices fluctuate considerably, and personal fortunes are made and lost in the stock market. This year was no exception. While companies such as Silicon Valley’s Nvidia were a boon for shareholders, with share price growing by more than 200%, other companies, like drugmaker Alexion, lost roughly 40% or more of their value on Wall Street.
No matter the underlying causes, the fluctuation of a given company’s stock price is indicative of investor confidence. 24/7 Wall St. reviewed the year-to-date share price changes for each company in the Standard & Poor’s 500 index to determine the most and least successful stocks in 2016.
The S&P 500 is an index of the 500 publicly traded companies with the highest total share value. The index is designed to reflect the overall performance of large companies specifically and is an important benchmark for the stock market and the U.S. economy. Because the companies that comprise the S&P 500 index are large by definition, they are often considered relatively safe investments, more likely to be protected from large share price fluctuations. However, every company on this list is an exception.
Several of the best performing companies — with the largest share price gains year-to-date — operate in the resource extraction business. While the oil and gas industry has been severely hurt by the recent drop in oil prices, activities related to pipeline construction have not slowed. Pipeline construction and capacity are up in 2016 compared with previous years. Across the nation, 10 U.S. natural gas pipeline projects have been completed or are expected to be completed before the end of 2016, according to the Energy Information Association. Two of the strongest S&P 500 performers are are oil and gas pipeline companies.
Additionally, two other top-performers are involved in precious metal extraction. The prices of gold, silver, and copper have all increased in 2016.
On the other side of the coin, shares of many companies that lost value this year were in biotech and pharmaceutical manufacturing, an industry in which companies often report little revenue and exceptionally high research and development costs. Of the eight health care companies that were among the worst performers, seven missed earnings estimates in at least one quarter this year.
Legal trouble also tends to spook investors. The one drug maker on this list to report a significant drop in share price in 2016 that did not disappoint investors when reporting financial results faced a bigger problem this year. Shares of Endo International plunged after a class action lawsuit against a company’s subsidiary was filed alleging it colluded with other companies in an effort to fix drug prices.
No matter what happened to a given company’s share price in 2016, a single year is often not enough to perfectly gauge the ultimate success of a company. Many companies on this list have been publicly traded for decades and have seen dramatic hikes and dips in their share prices.
In order to determine the most and least successful companies in 2016, 24/7 Wall St. reviewed the largest positive and largest negative stock price changes from January 4 to December 15 2016 for all companies comprising the Standard & Poors 500 index. Revenue for each company’s latest fiscal year came from financial documents filed with the Securities and Exchange Commission. Projected fiscal year revenue was obtained from Yahoo Finance. Sector classification is based on the S&P 500 index. Companies in the S&P 500 that implemented stock splits at some point in 2016 — Monster Beverage Corp, for example — were excluded due what would be conflicting year-to-date periods.
These are America’s most and least successful companies of 2016.