ByELIZABETH TROTTA
It's not a> red-letter date most people want to remember, but Tuesday carries a lot significance for investors it marks the one-year anniversary of the Dow Jones Industrial Average dipping to its lowest point of the so-called Great Recession. On March 9, 2009, the blue-chip index finished the day at 6547, its lowest point since 1997.
Of course, a lot has happened since then. Economic data have improved, and the Federal Reserve has raised its discount rate a move some called the prelude to an exit strategy. Meanwhile, the market has rebounded dramatically, and although the Dow remains well off its peak close of 14165 reached on Oct. 9, 2007, investors who made the right moves a year ago have benefited handsomely.
The broad strokes are well known. Financials bounced back, and industrials recovered as the economy improved. But which individual stocks have led this fledgling recovery back from the bottom? SmartMoney wanted to find out. So we analyzed the numbers, reviewing the biggest gaining stocks in the Dow and the S&P 500.
Find out which stocks have performed best since the plunge.
While the results included their share of banks and industrials, there were also some names that may surprise many investors. Case in point: the hotel firm Wyndham Worldwide (WYN),
Another surprise: Ford (F)
There were also some unexpected results in exchange-traded funds. Among all ETFs, Ultra Real Estate ProShares (URE)
Of course, financial stocks and ETFs were among the best performers on a percentage basis. The Dow's top three biggest gainers were Bank of America (BAC),
"It's a case of who was down the most and had the biggest recovery," Sharma says, adding that financial services were the S&P 500's biggest decliners between October 2008 and March 2009, having lost 70%.
Investor psychology also played a role. Some companies like Fifth Third Bancorp (FITB)
Not every company benefited from the bounce. As banks and industrials recovered, communications companies continued to face challenges. Some of the biggest losers included MetroPCS Communications (PCS)
Click > here >
Percentage gain from 3/9/09 through 3/5/10: 1,701%
Bounce Factor: In short, Genworth's mortgage and insurance businesses dug it such a deep a hole that an impressive rebound was almost inevitable if the firm could hang on. "It was ugly," says Steven Schwartz, analyst at Raymond James. "You combine a financial insurance company with a mortgage insurer with a whole bunch of debt coming due at exactly the same time." He adds, "They managed to get through with internal sources, until the credit markets improved, and they were able to raise capital outside." (That included selling 51% of its Canadian operations, he says).
What's next: The company appears to be on more solid ground since restructuring its life insurance unit to focus more on Main Street, Schwartz says. He adds that even the mortgage business is seeing a light at the end of the tunnel delinquencies are expected to decline into the second half of this year, and loan modification and refinance programs seem to be getting traction.
Percentage gain from 3/9/09 through 3/5/10: 1,156%
Bounce Factor: No, there wasn't a rush on staplers. Investors returned to Office Depot as the company moved to get its financial house in order. "Where Office Depot really deserves credit is improving its balance sheet, taking steps to stabilize its sales and improve its margins, and in spite of a difficult economy," says Keybanc's Thomas. "It's sort of boring in the sense that it's not like there's some silver bullet or exciting new product."
What's next: Where Office Depot goes from here may have more to do with the economy and the environment for business growth than anything else. With its balance sheet concerns behind it, the investment thesis hinges more on earnings growth potential, Thomas says. "We are encouraged by a number of the margin initiatives and investments slated for 2010 that should improve systems and help to improve their delivery business," he says. "We are still a bit concerned about their exposure to states like California, Texas and Florida, that obviously face deeper housing and fiscal issues."
Percentage gain from 3/9/09 through 3/5/10: 816%
Bounce Factor: Like many of its peers, Fifth Third found itself in dire straits a year ago. "There was just a black hole it was impossible to value the banks, there was a capital issue and there were concerns about whether or not it would make it," says Peter Winter, BMO Captial Markets analyst. The company's stock fell to as low as $1.22 on March 9, 2009, before closing at $1.39. "When you get to that level, there's complete pandemonium if the company is going to make it." But after a sale of 51% of its processing business and a stress-test capital requirement that wasn't as onerous as expected, investors came back in droves.
What's next: Looking ahead, earnings leverage from the credit recovery and top-line growth could offer more upside. "We're expecting that credit costs will peak in the latter part of this year," says Winter. "But for Fifth Third, we think that credit costs have already peaked, and we think they'll have a lot of earnings leverage when their credit costs begin to normalize."
Percentage gain from 3/9/09 through 3/5/10: 734%
Bounce Factor: Media was already struggling with waning demand for print publications, and the knock the industry took when ad revenue dried up didn't help. "Anything that was advertising related got smashed including a double digit decline in ads almost across the board and much steeper for many companies and those that were considered to be old media or dinosaur media, got whacked even worse," says Barry Lucas, Senior VP Research at Gabelli & Company. But the death knell for media may have been premature. And a number of industry players including Gannett did some financing, Lucas says.
What's next: Investors might want to look to Washington and Detroit. The company's television business stands to benefit from the political cycle and a comeback in autos; each will generate ads. Autos advertising, the largest category for the TV broadcaster, was down 50% in 2009, says Lucas.
On the newspaper side, "things are less bad still not good, but they've taken a tremendous amount of cost out of the business," says Lucas. He adds that the digital business, largely Career Builder, stands to benefit from any pickup in employment.
Percentage gain from 3/9/09 through 3/5/10: 674.52%
Bounce Factor: Who wants to commit to a time-share after they've lost their job or when they fear they might? Recessions aren't exactly good for hospitality-oriented businesses, but as worries over the travel business began to fade, the company posted improving results and took some bolder steps to attract investors, including a bumping its dividend. "The stock was severely underpriced last year and primarily there was great concern about the financing and viability about the time share business, and the company has reduced the scope of that business" says Michael Millman of Millman Research Associates. "Secondly, financing has become available again for that business."
What's next: Continuing to adapt is critical for any business, and that's particularly true for the hospitality industry, where consumer habits have changed. "I think the company is moving more and more toward a fee-for-service business, and I think that's totally appropriate, " says Millman. "And everything that they're doing suggests that they'll continue to increase the share of the revenue that comes from fee-for-services." The firm's recent acquisition of Hoseasons fits that model.



- LinkedIn
- Fark
- del.icio.us
- Reddit
X