10 Most Volatile Large-Cap Stocks

NEW YORK ( TheStreet) -- Stocks are once again trading near their pre-Lehman Brothers highs. But the journey in the last two years for investors has been anything but smooth. Volatility has increased significantly and even large-caps have not proved safe from sudden sharp downward swings.

TheStreet presents ten of the most volatile large-cap stocks so far in 2010. Volatility is calculated on a historical basis as the standard deviation from average daily logarithmic price changes using Bloomberg data. In other words, these are the stocks that have departed the most from their average price on a daily basis in 2010.

For long-term investors, these stocks may not be appropriate for a buy and hold, forget-about-it approach and may require more active monitoring. Traders may be more interested in the implied volatility of these stocks which are more forward looking, but many of these stocks are likely to remain in the volatility radar.

The stocks are ranked from the least to the most volatile, according to data from Bloomberg.

10. International Paper

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Year-to-Date Return: -2.2%

Biggest One-Day Gain: 7% on May 10

Biggest One-Day Drop: 7.5% on June 22

Best Month: April, 9% rise.

Worst Month: August, stock dropped 15%

52-Week High: $29.25

52-Week Low: $19.33

Current Market Price: $25.74

Global paper and packaging company International Paper ( IP) recently reported record quarterly earnings on the back of higher prices and rebounding demand for containerboard, a special paper used to make shipping boxes.

The company reported profit of 91 cents per share, beating estimates of 79 cents by a wide margin. "Volume improvements account for about one-third of the earnings improvement, and in North America, it's been a slow, gradual recovery," said Chief Financial Officer Timothy Nicholls, on a call with analysts. "Outside North America, it's been a quicker recovery and a stronger recovery."

Paper companies have been suffering from weak demand and overcapacity. Paper stocks are trading at single-digit multiples. However, uncertainty about the ability to sustain price increases have weighed on the sector.

In September, industry trade publication Pulp & Paper Weekly revised the prices of containerboards lower, as it suspected paper companies will be unable to make a round of price increases instituted in August stick.

While International Paper benefited from earlier price increases, Morningstar analyst Tom Mullarkey expects a dip in packaging prices will likely affect earnings in the fourth quarter, according to a Reuters report.

9. Halliburton

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Year-to-Date Return: 6%

Biggest One-Day Gain: 12% on June 2

Biggest One-Day Drop: 15% drop on June 1

Best Month: July, 22% gain

Worst Month: May, 19% drop

52-Week High: $35.89

52-Week Low: $21.10

Current Market Price: $33.26

It is no surprise that Halliburton ( HAL) has had a volatile year at the bourses. The BP ( BP) Macondo oil spill, the resultant moratorium on offshore drilling in the Gulf of Mexico and the investigation into the energy services provider's role in the oil spill has sent the stock on a roller-coaster ride this year.

In May, the stock sank 19% as the investigators began to examine Halliburton's cement job on the deepwater drill hole, sparking concerns of its liability if found guilty of gross negligence.

The stock also continued to be weighed by the ban on offshore drilling in the Gulf of Mexico region, which accounts for a little less than 15% of its business.

In late October, the stock crashed another 10% after the Presidential Commission investigating the spill revealed that tests conducted before the rig's explosion showed that cement used by Halliburton were liable to create unstable conditions.

Still, the company has continued to beat analyst expectations quarter after quarter and its leadership status in the offshore drilling segment makes it a buy, according to TheStreet contributor Daniel Dicker.

Others suggest a more cautious approach, given the legal risks involved. "I support Halliburton shares here, but if you can be buying insurance on Halliburton through the options markets, I would be doing that too," Sterne Agee analyst David Havens told TheStreet.

8. Freeport-McMoRan

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Year-to-Date Return: 30.5%

Biggest One-Day Gain: 7.4% on Feb. 1

Biggest One-Day Drop: 6.6% on July 7

Best Month: July, up 21%

Worst Month: June, down 15%

52-Week High: $104.84

52-Week Low: $56.71

Current Market Price: $102.65

Freeport McMoRan ( FCX) is trading near its 52-week high after gaining nearly 80% since its July low of $57 on the back of a strong outlook for copper and general strength in base metals on a weaker dollar.

Freeport, which operates the enormous Grasberg copper and gold mine in Indonesia, said third-quarter earnings came to $1.2 billion, or $2.49 a share, up 30% from a year ago and surpassing the $2.12 a share that sell-side analysts, on average, were expecting. The strong performance led the company to raise its dividend.

However, the company, like other commodity majors, is dependent on China to sustain its growth and the stock remains vulnerable to any bad news that may suggest that the world's fastest growing economy is overheating and could be in for a hard-landing.

7. Wynn Resorts

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Year-to-Date Return: 94%

Biggest One-Day Gain: 8.4% on Oct. 11

Biggest One-Day Drop: 7.7% on Jun.29

Best Month: March, up 19.2%

Worst Month: June, down 9%

52-Week High: $115.44

52-Week Low: $ 58.21

Current Market Price: $113.87

Wynn Resorts ( WYNN) has been among the casino stock favorites benefiting from a booming gaming market in Macau.

During the quarter, the casino operator lost $33.5 million, or 27 cents per share, compared with a profit of $34.2 million, or 28 cents, in the year-ago period. On an adjusted basis, Wynn Resorts actually earned 39 cents, matching Wall Street's outlook. Wynn Resorts revenue grew to $1 billion from $773.1 million, better than the $990.8 million analysts predicted.

The stock has been downgraded recently on the grounds of high valuation and the absence of near-term catalysts as Las Vegas still struggles to emerge from the recession. Analysts at Citigroup and Barclays recently raised their price targets for the stock to $90 but maintained a sell rating and a neutral rating respectively on the stock.

6. Fifth Third Bancorp

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Year-to-Date Return: 33%

Biggest One-Day Gain: 10.4% on July 22

Biggest One-Day Drop: 8.1% on July 16

Best Month: January, up 27.5%

Worst Month: August, down 13%

52-Week High: $15.95

52-Week Low: $9.22

Current Market Price: $12.87

Uncertainty surrounding the passage of financial reform, its impact on banks' earnings, the foreclosure moratorium, increasing mortgage repurchase requests, and continuing economic woes have been the long series of volatility triggers among banking stocks this year.

The Cincinatti-Ohio based regional bank Fifth Third Bancorp ( FITB) tops the list for being the most volatile.

Fifth Third has been among the harder-hit regional banks but the bank swung to profit in the third quarter on the back of a pickup in auto and commercial lending and $449 million in reserve releases.

Still, Fifth Third is yet to repay $3.4 billion in government bailout money. Investors were hoping that a return to profitability will bring some clarity on the bank's plans to repay TARP.

However, the bank remained cautious about drawing up a repayment time frame. "We said that we thought a TARP resolution in the second half of 2010 seemed reasonable for us. While that's still the case, we've also expressed that we've been willing to be patient," CEO Kevin Kabat said in the bank's conference call. "It has always been about the right result rather than a particular timeframe," he added.

Fifth Third is also frequently cited as a potential M&A target by analysts and tends to react to takeover buzz.

5. First Solar

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Year-to-Date Return: 2.5%

Biggest One-Day Gain: 17.7% on April 29

Biggest One-Day Drop: 8.9% on Oct. 29

Best Month: April, up 17%

Worst Month: January, down 16%

52-Week High: $153.30

52-Week Low: $98.71

Current Market Price: $138.62

Trading at rich valuations, First Solar ( FSLR) is given to wide swings in stock prices. The stock shed 9% immediately following its results on October 29, despite the fact that the company beat expectations and raised its outlook for the fourth quarter. Declining gross margins, an uncertain 2011 outlook and vulnerability to risks such as withdrawal of European subsidies for solar, are some of the concerns that are currently weighing on the stock.

First Solar is up 2.5% for the year but shares have traded as high as $153 and have hovered in the range of $100 twice this year -- in February, when fears of feed-in tariff cuts sunk solar stocks, and again in June, when the euro slide was the pressure point for solar shares.

First Solar will roll out official guidance for 2011 in its annual investor day conference in mid-December.

4. Priceline.com

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Year-to-Date Return: 78%

Biggest One-Day Gain: 22% on August 4

Biggest One-Day Drop: 12.1% on May 11

Best Month: August, up 30%

Worst Month:May, down 27%

52-Week High: $388.88

52-Week Low: $172.10

Current Market Price: $420.65

Online travel site Priceline.com ( PCLN) was hit hard in May after the volcanic eruptions in Iceland hurt online bookings for European-bound travel and led the company to lower its second-half guidance.

But shares rebounded after the company reported better-than-expected results in the second quarter.

The company continued its strong performance in the third quarter as well, reporting a profit of $5.33 a share against expectations of $4.97 on Monday. Priceline.com also raised fourth quarter EPS guidance to $2.91 to $3.06 versus estimates for $2.68. Shares soared 9% on Tuesday.

Growth was driven by rebounding demand for hotel rooms, a surge in international bookings and growth in Europe and Asia, the company said.

3. Sprint Nextel

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Year-to-Date Return: 9%

Biggest One-Day Gain: 10.4% on May 25

Biggest One-Day Drop: 7.9% on Feb. 10

Best Month: May, up 20%

Worst Month: June, down 17%

52-Week High: $5.31

52-Week Low: $2.90

Current Market Price: $4.03

Shares of Sprint Nextel ( S) took a knock earlier in the year as the wireless telco continued to lose its subscriber base to AT&T ( T) and Verizon ( VZ) and lost contract-paying customers.

It surged 20% in May in part after Goldman Sachs upgraded the stock to a buy citing a lower churn rate. Hopes that it would benefit from its 4G rollout also improved optimism in the stock.

Last week, Sprint teamed up with Clearwire ( CLWR) to roll out a speedy 4G wireless internet service in New York, becoming the first of the telecom operators to do so.

Sprint's 4G-enabled smartphones, the HTC EVO and Samsung Epic, are the only smartphones equipped to use the network. Sprint is hoping that its trailblazer status in 4G will help it win over customers from Verizon and AT&T, who have said their own 4G networks will launch at the end of the year and sometime next year, respectively.

Shares of Sprint were under pressure again late last week after Clearwire, in which it has a 54% stake, said it may not have enough financing to operate its business.

2. Anadarko Petroleum

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Year-to-Date Return: 8.3%

Biggest One-Day Gain: 12.4% on June 10

Biggest One-Day Drop: 19.5% on June 1

Best Month: July, up 36%

Worst Month: June, down 30%

52-Week High: $75.07

52-Week Low: $34.54

Current Market Price: $63.34

With a 25% stake in the ill-fated BP ( BP) Macondo well project, Anadarko Petroleum ( APC) has been plagued by concerns that it will be held liable for legal compensation damages for the Gulf of Mexico oil spill.

Unlike Halliburton ( HAL) and Transocean ( RIG), who have claimed that their contracts with BP protect them from legal damages, Anadarko has to prove gross negligence by BP to escape liability.

Anadarko has since attacked BP's role in the oil spill crisis and refused to take charges related to the oil spill in its latest earnings report.

The stock shed 30% in June as investors began to get a better sense of the extent of the oil spill damage. It nearly doubled from its June lows, partly on M&A buzz that suggested it might get better value for its 24% stake in the Jubilee oil field.

On Monday, the stock fell as much as 6% again after investigations into the oil spill concluded that none of the parties involved in the Macondo project put money before safety, absolving BP of the charge that it had taken undue risks to cut costs. While the government's findings have no legal applications, including questions of negligence, Anadarko might have a harder case to make.

1. AIG

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Year-to-Date Return: 52%

Biggest One-Day Gain: 16.3% on Feb. 10

Biggest One-Day Drop: 16.1% on Apr. 27

Best Month: March, up 37%

Worst Month:Jan, down 19%

52-Week High: $45.95

52-Week Low: $21.54

Current Market Price: $42.94

AIG ( AIG) was a "zombie stock" in March 2009. It remained a highly volatile stock through 2009, but since the takeover of CEO Robert Benmosche the stock has traded with more stability.

It has more than doubled from its lows in August 2009 and is up more than 50% this year. In the annual meeting in May, Benmosche said the firm would live up to its obligations to the shareholder. Shareholder wealth was presumed to be all but wiped out when the Government bailed out AIG in September 2008 and took an 80% stake in the firm.

But investor confidence in the stock has been bolstered by the successful sale of Alico to Metlife ( MET) and the public offer of AIA, its life insurance business in Asia. AIG is set to repay $37 billion in bailout money.

AIG swung to a loss in the third quarter, due to heightened restructuring costs and soft business conditions.

Analysts are slowly turning bullish on AIG with two out of five analysts rating the stock a buy or an outperform, according to Reuters.

-- Written by Shanthi Venkataraman in New York

>To contact the writer of this article, click here: Shanthi Venkataraman.

>To follow the writer on Twitter, go to http://twitter.com/shavenk.

>To submit a news tip, send an email to: tips@thestreet.com.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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