Forget about FANG stocks, big tech and "meme" stocks — they're old news for now. Investors found another surprising gang of runaway winners in the S&P 500.
Five unabashedly non-big-tech stocks in the S&P 500, including industrial Deere, health care player McKesson and consumer discretionary Expedia, aren't part of a cute acronym, but they're on an even more important roll. Their shares are up more than 5% this year already — and topped the S&P 500 in each of the past two years, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
That run isn't as easy as it might sound. For one, the S&P 500 itself is down more than 5% this year so far — sinking a surprisingly large number of stocks with it. And topping the index in the past two years is no small feat. The S&P 500 soared 26.9% in 2021 after jumping 16.3% in 2020.
These breakaway stocks are extending gains as former favorites struggle. "We may be seeing the worst the year will bring for some of the largest and most popular tech stocks," said Daniel Wiener, co-editor of The Independent Adviser for Vanguard Investors.
S&P 500 Stocks Not Missing A Beat
Simply being up this year is quite an accomplishment among the S&P 500. And extending that from prior years' gains is even more rare — especially among big stocks everyone thought they had to own.
Get this: Two of the worst S&P 500 stocks this year are FANG stocks: Meta Platforms, the former Facebook in FANG and Netflix. Meta is down nearly 35% and Netflix is off 33%.
And they're not alone. Just this year so far, 315 S&P 500 stocks, or more than 60% of the index, are down. And that includes many of these fallen favorites. Not even stellar profit reports can save them. Alphabet, the old G in FANG, is down nearly 4% this year. And Amazon.com is off 3.2%. And both absolutely trounced estimates for fourth-quarter profits.
So where are the new repeat performers? Not in tech.
Plowing Profits In The S&P 500: Deere
Here's a surprising top stock that keeps delivering: Deere. The IBD Stock Of The Day is turning heads with a nearly 14% rally this year to 389.88. And that's in a tough tape for the S&P 500.
But what many might not know, is that Deere has been reaping gains for investors for years. Last year, shares jumped 27.4%, enough to edge out the S&P 500. And the year before that? It shot up 55.3%.
Perhaps even more impressive is that S&P 500 analysts still see upside. They're calling for Deere to hit 413.52 a share in 12 months' time. If they're right, that would be 6% upside. The wildcard, though, is profit. Analysts think Deere's profit will rise nearly 17% this year to $22.19 a share.
Finding S&P 500 Gains In Unlikely Places
Medical equipment and prescription filling services like those from McKesson might not inspire the imagination like the metaverse does. But they sure work wonders in a portfolio.
Shares of the IBD 50 stock jumped more than 11% this year to 277.03, while the S&P 500 at large languishes. And keep in mind that's on top of a 43% rally in 2021 and 25.7% rise in 2020. Now that's a run.
Analysts still think there's upside to the story. They're calling for McKesson to be a 298.69 a share stock in 12 months, or nearly 8% higher. The company's profit is seen jumping nearly 40% in 2022 to 23.59 a share.
And also surprising is the 7.3% rise in travel booking service Expedia. It offers online booking, but it's in the S&P 500 consumer discretionary sector. And while Covid-19 is still wreaking havoc, Expedia's shares keep rising anyway. They're up more than 7% just this year to 193.90. Amazingly, too, the stock jumped nearly 37% in 2021 in the throes of Covid outbreaks and 22.4% in 2020, too.
Some think S&P 500 tech kings will reassert themselves. Wiener points out FANG stocks typically do the worst in the first quarter. And he thinks they'll likely retake the leadership from the fallen tech giants from the new crop.
"The point being that what we may be seeing right now could be the worst for the large, popular, high-growth stocks that investors have been enamored of for years. Or not," he said.
Top S&P 500 Stocks On A Roll
All topped the S&P 500 in 2020 and 2021 and are up 5% or more this year so far
| Company | Ticker | Stock 2020 % ch. | % stock ch. in 2021 | Year-to-date % stock ch. | Sector |
|---|---|---|---|---|---|
| Deere | 55.3% | 27.4% | 13.7% | Industrials | |
| McKesson | 25.7 | 42.9 | 11.4 | Health Care | |
| Expedia Group | 22.4 | 36.5 | 7.3 | Consumer Discretionary | |
| Morgan Stanley | 34.1 | 43.2 | 8.3 | Financials | |
| United Parcel Service | 43.9 | 27.3 | 5.1 | Industrials | |
| S&P 500 | 16.3 | 26.9 | -5.1 |
