Investors finally got a good month in the S&P 500. And some traders really maximized their gains.
All told, had you invested $10,000 in January and reinvested your money into the top stock currently in the S&P 500 each month this year, including DexCom in October, you'd have $197,394 now, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
That's an impressive 10-month gain of more than 1,870%. That's quite a feat in a year the S&P 500 is down more than 18% and has been brushing with a bear market all year. The same $10,000 invested in the S&P 500 would be worth just $8,130 now. That's a loss of $1,870.
While these 10 stocks jumped the most, the S&P 500 did well during the month, too. The S&P 500 rose 8.1% in October, known as the bear-killer month for stocks. That snapped a two-month losing streak in September and August. It also marked the index's second-best monthly gain of the year (second to the 9.1% rise in July). To date, the S&P 500 dropped in seven of the past 10 months.
Did October Kill The Bear?
Hindsight is 20-20. And clearly, few if any investors could have picked out the top stock in each of the past 10 months, as it's not a repeatable strategy. But the staggering numbers are a reminder to investors that gains can be found in a bear market.
Investors get hopeful that markets will improve in October following a rough year. And this year, this wish played out right on cue. The month of October is known as the "bear killer." And during the month, the S&P 500 narrowed its year-to-date loss and eased out of a bear market.
Also on the plus side, there was no crash during the month. October is also known as the "jinx month" due to crashes in the month in 1929, 1987, 1997 and 2008, says the Stock Trader's Almanac.
This year's October gain was much better than the S&P 500's average gain during the month of 0.5%.
Top Stock Of October: DexCom
Maker of glucose monitoring equipment DexCom was the S&P 500 stock to own in October. Shares soared more than 51% during the month. The company on Oct. 27 reported a quarterly profit that topped views by nearly 17%.
But October had other money making opportunties, too. Nearly 15 stocks in the S&P 500 jumped 30% or more. Just when it looked like S&P 500 energy stocks would take a back seat to other sectors, Halliburton turned it on — again. October is the second month this year Halliburton was among the S&P 500's top stocks.
Shares of the energy firm jumped 47% during the month, making it the top-performing stock in the S&P 500. The company is simply delivering the kind of growth that's not easy to find. Analysts think the company will make upward of $2.10 a share this year. If they're right, that would be more than 94% growth.
And the company is already proving it can deliver, and then some. Halliburton on Oct. 25 reported more than 114% higher adjusted profit of 60 cents a share. That essentially matched the already high expectations. And now, investors hope profit in the fourth quarter will jump 86%.
Reading The S&P 500 This Year
Each month's twists and turns reveal just how difficult of an S&P 500 this is for investors.
The year kicked off inflation fears and turned Halliburton into January's best stock with its 34% jump. And then hopes for government stimulus for more alternative-energy plays fanned SolarEdge (SEDG) into February's top stock.
Speculation started to return to the S&P 500 in July, when the market finally staged a powerful 9.1% rally. That month, information-technology play Enphase Energy (ENPH) was tops with its 45.6% rise. But that rally ended quickly, followed by a 3.5% drop in August when the top-performing stock was a utility: Constellation Energy (CEG). And that brings us to September, when it took a medical breakthrough at Biogen to escape the market's downward pull. Health care created the top winner in October, too.
Some hope that November, traditionally the second-best month of the year, will build on the S&P 500's momentum. But one thing's for sure: S&P 500 investors will still find a way to avoid a jinx.
How To Turn $10,000 Into $197,394 In 10 Months
| Month | Top S&P 500 stock | Symbol | Monthly gain | Sector | S&P 500 monthly change | Beginning balance | Cumulative value of $10,000 investment in January reinvested in best stock each month |
|---|---|---|---|---|---|---|---|
| January | Halliburton | 34.4% | Energy | -5.3% | $10,000 | $13,440 | |
| February | SolarEdge | 34.1% | Information Technology | -3.1% | $13,440 | $18,023 | |
| March | Nielsen Holdings | 56.4% | Industrials | 3.6% | $18,023 | $28,188 | |
| April | 26.9% | Communication Services | -5.4% | $28,188 | $35,771 | ||
| May | Albemarle | 33.4% | Materials | -5.3% | $35,771 | $47,718 | |
| June | Dollar General | 11.4% | Consumer Discretionary | -8.4% | $47,718 | $53,158 | |
| July | Enphase Energy | 45.6% | Information Technology | 9.1% | $53,158 | $77,398 | |
| August | Constellation Energy | 23.4% | Utilities | -3.5% | $77,398 | $95,509 | |
| September | Biogen | 36.6% | Health Care | -9.3% | $95,509 | $130,465 | |
| October | DexCom | 51.3% | Health Care | 8.1% | $130,465 | $197,394 |
Sources: IBD, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz
