This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

2013 Top Stocks Netflix, Micron May Not Do as Well in 2014

Stocks in this article: DALMUYHOONFLXBBYGNWETFCTRIPCELGWDC

NEW YORK (The Street) -- The top performing stocks this year have netted investors returns of more than 100% but fund managers are divided on their fortunes for 2014.

Netflix  (NFLX)Micron (MU), BestBuy (BBY), Delta (DAL), Genworth  (GNW)E*Trade  (ETFC), Trip Advisor  (TRIP)Celgene (CELG),Yahoo! (YHOO), and Western Digital (WDC) are among the S&P 500's star performers for 2013. As the top performer, Netflix has rocketed more than 300% while Micron and BestBuy have jumped more than 200% in a year when the S&P 500 has posted gains of around 24%.

But several stocks on the list provoke caution.

"A lot of them are momentum stocks where their PE multiple was much higher than the market, and there was a lot of excitement in the market this year," Capital Advisors investment manager Channing Smith said in a phone interview. The Tulsa-based manager warned that unless the rally continued apace, high valuations may be difficult to justify. Smith helps oversee $1.2 billion.

Some stocks remain firm fund manager favorites: Delta and Micron are frequently cited as companies with strong market positions and favorable demand backdrops.

Raymond James chief investment strategist Jeffery Saut has a strong "buy" on Micron, and expects Delta and Yahoo! to continue their outperformance.

For Micron, Saut pointed to DRAM pricing normalization and positive commentary from senior executives on a recent conference call. Charlie Smith, chief investment officer at Fort Pitt Capital Group, agreed, noting a strong demand environment for Micron's products and their earnings-accretive Elpida acquisition.

Saut, who helps oversee $400 billion in funds, is positive on the airline industry for stocks like Delta.

"Airlines are a direct beneficiary of lower fuel prices and the industry has rationalized, so while it's not a monopoly it's certainly an oligopoly," he said in a phone interview. American, United, Delta and Southwest now control more than 80% of the U.S. airline market. He has a "market perform" recommendation on E*Trade, Trip Advisor and Best Buy due to valuation concerns.

The Raymond James strategist remains optimistic on the outlook for Yahoo! and pointed to CEO Marissa Mayer's ability to understand the technical side of the business as well as corporate strategy. He noted the search engine's traffic trends are up 20% over the last 15 months while Yahoo! has 390 million mobile users, a rise of 15%, quarter over quarter.

Hodges Capital founder Don Hodges also backed Delta and is bullish on the airline sector generally. But he cautions that stocks such as Western Digital have a highly commoditized business.

More broadly, only four stocks among the top 10 have 50% or more "buy" recommendations from analysts than "hold" or "sell" ratings. These include Delta (94% buy recommendations) Celgene, Best Buy and Micron. After Netflix's strong rally, just 15% of analysts have a buy on the stock which is perhaps proof that after a year when the rally was fueled by multiple expansion, investors will need to cast a harsh eye over portfolios to assess whether stocks can deliver on earnings growth.

-- Written by Jane Searle

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,828.24 +0.49 0.00%
S&P 500 2,067.56 -5.27 -0.25%
NASDAQ 4,791.63 +4.3130 0.09%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs