Dump Some Rockets of 2011 and Shop for Steady Gainers

December 23rd, 2011
in contributors

by Dee Gill, Y Charts

Congratulations to those lucky investors who saw their very own portfolio stocks on one of those Top Performers of 2011 lists.  Now might be a great time to get rid rocketof them.  For if the curse of the winners plays out next year as it did in 2011, the also-rans will make better investments going forward.

The problem with A-listers is that they tend to look rather expensive when market conditions are less than ideal, like when Europe is swimming in debt and Congress can’t get its act together. Investors worried that stocks generally will fall often take profits, and where better to start than with the shares that just had a great run?

Follow up:

These sorts of issues led most of last year’s Top 10 Performers to lose 20% or more in value during 2011.  Only two of the top 10 S&P performers of 2010 are up this year. The rest sank. Here’s a sample.

Netflix Stock Chart

Netflix Stock Chart by YCharts

It’s a similar story with last year’s top Fortune 500 stocks. Five of the eight that doubled in value in 2010 were way down in 2011.

TRW Automotive Stock Chart

TRW Automotive Stock Chart by YCharts

It’s true that a couple of last year’s winners did do well this year too. Chipotle Mexican Grill (CMG), up 141% in 2010, gained 42% this year. And if 2012 turns out to be a rip-roaring market after all, those big gainers of 2011 can keep on gaining. But with today’s uncertainty, perhaps a better hunting ground for 2012 investing is the B-list. Those would be companies that did well for investors this year, but not alarmingly so. Here’s a look at a few less-than-top stocks that still made investors proud.

YUM! Brands (YUM)

YUM! Brands Stock Chart

YUM! Brands Stock Chart by YCharts

It turns out there’s not much correlation between the level of European debt hysteria and the sale of cheap junk food. YUM! Brands has seen sales and profits rise as it builds Taco Bells, KFCs and Pizza Huts all over the world.

YUM! Brands Revenues TTM Chart

YUM! Brands Revenues TTM Chart by YCharts

There are rumblings that a slowdown in China’s economy might slow YUM’s growth a little, but there’s a dividend yielding about 2% that helps allay those worries.

Tyson Foods (TSN)

Tyson Foods Stock Chart

Tyson Foods Stock Chart by YCharts

Everyone knows Tyson as the company that sells raw chicken, but it’s beef and pork sales that have given the company record revenues and big profits lately.

Tyson Foods Revenues TTM Chart

Tyson Foods Revenues TTM Chart by YCharts

The high feed prices and weak demand that plagued the chicken industry last year seem to be waning. Analysts peg Tyson shares as likely to benefit greatly from that turnaround in 2012.

Old Dominion Freight Line (ODFL)

Old Dominion often gets tagged as the best-run company in the trucking business, and anyone who has invested in this business over the years probably agrees.

Old Dominion Freight Line Stock Chart

Old Dominion Freight Line Stock Chart by YCharts

Business bounced back in a huge way this year. Moreover, steps taken during the downturn have pushed operating margins to their highest level ever. The company continues to open new service centers with money from operating cash flow.

McDonald’s (MCD)

It’s not common that shares of a $100-billion market cap company, like McDonald’s, with a nearly 3% dividend yield go up some 28% in 12 months, but McDonald’s did it in less than nine. The company has created those gains the old fashioned way, buy opening new stores and revamping old ones.

McDonald's Corporation Stock Chart

McDonald's Corporation Stock Chart by YCharts

Growing earnings has kept the share valuation from getting out of hand, and the shares still attract a long list of buy recommendations.

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About the Author

Dee Gill is an editor for the YCharts Pro Investor Service which includes professional stock charts, stock ratings and portfolio strategies. YCharts® Pro offers proven stock ratings, data downloads, portfolio strategies and avanced stock screening. Free 14 Day Trial is available.

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