The S&P 500 is on again, off again all year. But investors clearly have a "buy list" of stocks they want to own when the rally looks real.
Nine stocks in the S&P 500, including information technology plays Enphase Energy and Paycom Software, outperformed the index all four times the market rallied 5% or more this year. Tesla is another member of that elite group, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. All rallied 20% or more, on average, during the past four rallies.
Knowing where other S&P 500 investors are eager to put their money is helpful information as the market tries to finally find its footing. The S&P 500 is amid another attempted run, rising 2.5% from the recent low on Sept. 6.
"Parents are rejoicing back to school time and Wall Street is embracing the consistency in the Fed's messaging that they will keep at it until the job is done with inflation," said Edward Moya, senior market analyst at Oanda.
S&P 500 Rally? Another Head Fake?
On Thursday, the S&P 500 gained another 0.7% to 4,006.18. That pushes the index up roughly 2.5% in just three days, feeding hopes this rally might be the one that lasts.
But investors know better than to trust it, yet. The S&P 500 is still down nearly 16% this year. And it's mounted several failed attempts to pull higher.
Stocks staged their most powerful run this year from June 16 to Aug. 16, when the S&P 500 rallied more than 17%. But that's just the biggest and most impressive rally, until the pressures of inflation sank it again. The first attempted rally of the year, from Jan. 27 to Feb. 9, was the smallest with a 6% gain. Other failed rallies kicked off in March and May.
Each of these upswings ultimately disappointed investors. But if you look closely, you'll see the kinds of S&P 500 stocks investors appear trigger-ready to buy.
Enphase Energy: The S&P 500 Stock Everyone Wants To Buy
Want to know what's on the top of many investors buy list? It's a green energy firm with top-notch management: Enphase Energy.
The company's stock surges anytime the market starts to act better. It has rallied 35.7%, on average, during the past four 5% or greater rallies this year. That's a higher gain than any other S&P 500 stock by a healthy amount. Additionally, shares of Enphase jumped more than the S&P 500 during each of those four rallies. No wonder shares are up more than 73% this year.
Another well-run firm is also a go-to buy for S&P 500 investors when the market mounts a rally: Paycom Software. Paycom, which makes software to help companies manage their workforces, jumped more than 27% in this year's four attempted rallies of 5% or more. But like the S&P 500, Paycom stock hasn't been able to hold its ground, sinking more than 12% this year.
And Elon Musk's Tesla is another S&P 500 stock investors seem eager to own. Shares of the electric-car maker jumped more than 24% during the previous rallies, on average. Just in the last rally alone, from June through mid-August, shares of Tesla gained more than 40%. It's still down on the year, though, as gains slip away.
Interestingly though, it's clear investors are ready to buy S&P 500 technology stocks when the rally sticks. Six of the nine outperformers in the rally attempts are all in the technology sector.
Will Current S&P 500 Rally Continue?
Following Thursday's gain, S&P 500 investors hope this is the rally that will finally stick. And if it does, it's clear which stocks they prefer.
But it's still too soon to trust yet another fledgling rally. "One-day rallies have seen no further upside momentum, while 'buy the dip' after big down days has been replaced with 'sell the dip,' said Bespoke Investment Group.
Stocks S&P 500 Investors Love To Buy
All beat the market during 5% or greater rallies this year
| Company | Ticker | Average gain during 5%+ rallies in S&P 500 this year | Sector |
|---|---|---|---|
| Enphase Energy | 35.7% | Information Technology | |
| Paycom Software | 27.1 | Information Technology | |
| Tesla | 24.7 | Consumer Discretionary | |
| Monolithic Power Systems | 24.4 | Information Technology | |
| Amazon.com | 24.1 | Consumer Discretionary | |
| Chipotle Mexican Grill | 22.9 | Consumer Discretionary | |
| ON Semiconductor | 22.9 | Information Technology | |
| Nvidia | 22.6 | Information Technology | |
| Advanced Micro Devices | 20.2 | Information Technology |
