Everyone knows just a handful of giant stocks are driving a majority of the S&P 500's market value gains. But investors are making big percentage gains on less-obvious "pure" growth stocks.
Eight stocks in the S&P 500 Pure Growth Index, including Axon Enterprise, Fortinet and ON Semiconductor, are up 20% or more just this year. That's more than double the 7.5% gain by the S&P 500 itself this year.
And only one of them, Apple, is also among the biggest growth-stock gainers in market value this year that have been so conspicuously driving the market higher. Seeing such off-the-beaten path growth stocks are moving higher, as the rest of the market is in a "waiting game," points to their momentum.
"U.S. stocks are mostly lower ahead of what will be the start of a lengthy debt ceiling negotiations and ahead of an inflation report that should show the disinflation process is struggling," said Edward Moya, analyst at Oanda.
Growth Is Ruling The S&P 500
Just when investors scrambled to buy value and dividend stocks, growth stocks lit it up this year.
The SPDR Portfolio S&P Growth ETF is up 10.2% this year. That's handily topping the SPDR Portfolio S&P 500 Value ETF, which is up just 7.5%.
Just six big-name S&P 500 stocks: Apple, Alphabet, Amazon.com, Meta Platforms, Nvidia and Microsoft are getting all the attention due to their enormous market value gains. Together they've powered more than 90% of the S&P 500's gains. Only one of them, though (Apple), is considered a pure growth stock. The pure growth index only includes companies in the S&P 500 that possess the strongest growth characteristics.
Apple alone accounted for 26.3% of the S&P 500's $2.4 trillion gain this year by rising 32.3%. That's a larger contribution on a market value basis than any stock in the S&P 500. But it's far from being the very best pure S&P 500 growth stock this year on a percentage basis.
Off-The-Beaten Path Growth Champions In S&P 500
As great as Apple has been, its percentage gain still pales next to Axon Enterprise, maker of nonlethal defense products.
Shares of the company are up 37.1%, making it the top performer in the S&P 500 Pure Growth index. Axon is much smaller, though, than the biggest growth stocks in the S&P 500. That means it's contribution of nearly $5 billion in gains barely makes a blip in the S&P 500.
Same goes for top-managed online security firm Fortinet. The stock is up a whopping 35.7% this year, the No. 2 showing in the S&P 500 Pure Value index. But that's only added $13.8 billion in market value, despite the massive percentage gain.
That's not to belittle the massive market value gains of the S&P 500 giants. But investors need to know there's more to growth stocks than the biggest names.
Top S&P 500 Pure Value Gainers
They might not contribute as much to market value, but their percentage gains are head turning
| Company | Ticker | YTD % | Market value gain ($ billions) |
|---|---|---|---|
| Axon Enterprise | 37.1% | $4.99 | |
| Fortinet | 35.7% | $13.8 | |
| Apple | 32.3% | $637.1 | |
| ON Semiconductor | 25.8% | $6.9 | |
| Lam Research | 22.9% | $12.1 | |
| W.W. Grainger | 22.9% | $6.2 | |
| Fair Isaac | 22.6% | $3.4 | |
| Arch Capital Group | 21.9% | $5.2 |
Sources: S&P Global Market Intelligence, IBD, year-to-date gains based on S&P 500 Pure Growth index
Follow Matt Krantz on Twitter @mattkrantz
