10 Best-Performing S&P 500 Stocks of 2012

NEW YORK ( TheStreet) -- The top 10 performers on the benchmark S&P 500 so far this year include some of the worst stocks of 2011.

Sears ( SHLD), Bank of America ( BAC) and Netflix ( NFLX) are among those with the biggest increases in 2012, in contrast to last year, when they plunged between 55% and 61%.

The benchmark is up 12%, driven by an improvement in the U.S. economy and increased efforts to solve Europe's debt crisis. In addition, the potential for new monetary stimulus is still on the table based on Fed Chairman Ben Bernanke's speech last week.

With such a solid run in the first quarter of 2012, which came after a 11.4% increase in the S&P 500 in the last quarter of 2011, many investors are nervous that a pullback is in the cards. Sam Stovall, chief equity strategist at S&P Capital IQ, says the opposite is more likely.

"Since 1945, in the eight times the S&P 500 was up 10% or more in Q1, it gained another 3.3%, on average, in Q2," he says.

The 10 best-performing components of the S&P 500 so far this year have gained between 50% and 117%, topped by Sears. Unlike that department-store chain, high-fliers such as Priceline.com ( PCLN) and Salesforce.com ( CRM) rose last year -- and keep moving up.

In the reverse order of performance, here are the S&P 500's 10 best-performing stocks in 2012:

10. Pulte Group ( PHM)

Performance: up 50.2% (up 26.0% from year-end 2010)

Company profile: Homebuilder with a presence in 28 states, mostly in the East, Gulf Coast, Central and West regions of the U.S.

Investor takeaway: PulteGroup has benefitted from the improvement in the housing market, which seems to be bouncing along the bottom. Expectations for a solid spring selling season as the economy improves have also played a factor in the more recent performance of the stock.

Selling, general and administrative costs at the company are lower than they are at other homebuilders. The company significantly reduced debt in the fourth quarter and now has about $1.2 billion in cash as a cushion.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

9. Salesforce.com ( CRM)

Performance: up 51.8% (up 16.7% from year-end 2010)

Company profile: Salesforce.com is the leading provider of business software applications over the Internet. Salesforce.com has more than 92,300 customers around the world and derives more than 30% of its revenue from overseas.

Investor takeaway: Salesforce.com shares jumped Feb. 24 after the company reported solid fourth-quarter earnings. Since then, the stock has continued its ascent.

The company helped pioneer the "cloud computing" movement. Potential customers are recognizing the advantages of keeping software applications on remote servers: it saves money, software can be upgraded more easily and it's convenient. Salesforce says it completed four times the number of seven-figure deals last quarter compared with a year earlier, including one with Hewlett-Packard ( HPQ), and in the first quarter scored its first nine-figure deal, with an anonymous company.


8. Apple ( AAPL)

Performance: up 52.5% (up 91.5% from year-end 2010)

Company profile: Maker of the iPhone, iPad and MacBook.

Investor takeaway: Apple has been an amazing stock over the past 10 years -- just look at the chart below. The company now has a market cap of over $500 billion, the stock keeps hitting new highs, and there's big buzz surrounding the company, with most analysts certain that the stock has plenty of room to go higher. The backlog of new products seems to be robust and consumers can't seem to get enough of them. The newest iPad launch a few weeks ago was a huge success. Investors also cheered the company's announcement that it will begin paying a dividend and buy back $10 billion worth of shares over the next three years.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

7. Regions Financial ( RF)

Performance: up 52.6% (but still down 5.5% from year-end 2010)

Company profile: Regional bank operating in the South, Midwest and Texas.

Investor takeaway: Regions' stock jumped 7% after the Fed announced the bank passed the latest round of stress tests. Upon passage, the company successfully issued $900 million of stock to go toward repaying the remaining $3.5 billion in outstanding TARP funds the bank had on its balance sheet. Additionally, the company plans to complete the sale of its Morgan Keegan investment banking unit to Raymond James ( RJF) in early April for $930 million. After the results of the stress tests were released, S&P upgraded the bank's debt rating to investment grade, given the improved capital positioning.


6. Priceline.com ( PCLN)

Performance: up 53.6% (up 79.8% from year-end 2010)

Company profile: Global online travel company that allows customers to make hotel reservations, rent cars, and purchase airline tickets and vacation packages.

Investor takeaway: Priceline.com has among the best sales growth in the online travel industry, and it hasn't weakened. International expansion over the next three to five years will be a key growth driver. To its advantage, Priceline operates a highly variable cost model and doesn't have the IT investments that other online travel sites do. The balance sheet is very strong, with cash per share of $42 at the end of the most recent quarter.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

5. Federated Investors ( FII)

Performance: up 54.6% (but still down 6.6% from year-end 2010)

Company profile: Federated Investors is one of the largest managers of money market products in the U.S., with a market share of over 9%.

Investor takeaway: Despite taking a dip in early February on reports that the Securities and Exchange Commission would propose tough new rules for money market funds, the stock has rebounded to levels not seen since July. It's important to remember that Federated derives over 50% of its revenue from equities and fixed-income products, which has benefited from a nearly 12% increase in the S&P 500 this year.


4. Whirlpool ( WHR)

Performance: up 60.1% (but still down 11.5% from year-end 2010)

Company profile: Whirlpool is a leader in the $120 billion global home appliance industry. Its most famous brands are Whirlpool, Maytag, KitchenAid, Jenn-Air, Amana, Bauknecht, Brastemp and Consul.

Investor takeaway: Whirlpool's stock price surged over 25% in the days following Feb. 1, when the company issued a bullish outlook for 2012. Whirlpool's earnings forecast (for $6.50 to $7.00 in EPS) handily exceeded the Wall Street consensus target at that time. Last year, the company cut about 5,000 jobs and is planning for more cuts this year. To be sure, shares have also gotten a boost from hopes of a bottoming housing market, similar to another housing name on the list.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

3. Netflix ( NFLX)

Performance: up 71.5% (but still down 32.4% from year-end 2010)

Company profile: Internet subscription service for streaming TV shows and movies.

Investor takeaway: Netflix shares got hit hard last year when large numbers of subscribers defected in response to price increases. But investors began to regain confidence in the company as its subscriber growth has rebounded following moves into Canada and Latin America. More launches have also been planned in the U.K. and Ireland. That said, competition remains a concern for investors -- Amazon ( AMZN) has teamed up with Viacom ( VIA) and Verizon ( VZ) has teamed up with Coinstar ( CSTR), operator of Redbox DVD rentals, to offer competing products.


2. Bank of America ( BAC)

Performance: up 75.6% (but still down 26.5% from year-end 2010)

Company profile: Bank of America is one of the largest financial institutions in both the U.S. and overseas, lending to consumers, small businesses and corporations, in addition to its asset management and investment banking divisions. The company operates in 50 states.

Investor takeaway: Bank of America's stock popped 15% in the days after it was announced the bank had sufficient capital ratios to pass the government's latest round of stress tests in mid-March. The company didn't request to increase its dividend or buyback during the review. Since then, the stock has been trading in a tight range.

An improved capital position is very encouraging and coupled with Project New BAC, where CEO Brian Moynihan is cleaning up the business in several phases, which included slashing costs by $5 billion a year by 2014, it seems this bank is finally getting its house in order. Last week, the company said it's putting together an international advisory board to provide guidance on global strategy, preparing for a global push. About 65% of the analysts who follow the company rank it as a "hold."

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

1. Sears Holdings ( SHLD)

Performance: up 117.1% (but still down 4.4% from year-end 2010)

Company profile: Sears Holdings, parent company to Sears, Sears Canada and Kmart stores, is the fourth-largest retailer in the U.S. and the nation's biggest home-services provider, with more than 11 million service calls received every year.

Investor takeaway: Sears shares have been driven higher from its status as one of the worst-performing S&P 500 stocks last year, as the company is planning a big reboot. Sears, struggling to keep up with competition, said last month it had made moves to raise up to $750 million by selling 11 stores and spinning off some smaller-format stores. Since the announcement, Sears has cut a deal to sell three prize stores in Canada for $170 million. In its most recent effort to raise capital last week, it was reported that the company has been gauging interest in the sale of Lands' End to raise another $2 billion.

Morningstar analysts note that Sears skeptics point out that the company "can't shrink its way to profitability. Sales keep declining as fast or faster than management can cut costs and reduce inventory. Store closings will not be enough." So be forewarned that the stock's ascent may come to an end.

>>To see these stocks in action, visit the 10 Best-Performing S&P 500 Stocks of 2012 portfolio on Stockpickr.

-- Written by Lindsey Bell in New York.

>To follow the writer on Twitter, go to Lindsey Bell.

If you liked this article you might like

Citigroup Gives CEO Corbat 48% Pay Raise as Profitability Misses Goal

Citigroup Gives CEO Corbat 48% Pay Raise as Profitability Misses Goal

Worst-In-Class Goldman Sachs CEO Blankfein Gets 9% Pay Raise

Worst-In-Class Goldman Sachs CEO Blankfein Gets 9% Pay Raise

Why Bank of America and Goldman Sachs Shares Are Perfect Inflation Hedges

Why Bank of America and Goldman Sachs Shares Are Perfect Inflation Hedges

Stock Market Volatility Leads to Frightened Investors: Bank of America Survey

Stock Market Volatility Leads to Frightened Investors: Bank of America Survey

JPMorgan, Bank Stocks Have Room to Run Higher in Slow-Motion Economy

JPMorgan, Bank Stocks Have Room to Run Higher in Slow-Motion Economy