What's better than getting a 25% gain in a month on S&P 500 stocks? Getting it in the same month everyone else is down 7%.
And that's exactly what happened for investors with the top 10 S&P 500 stocks in January, including energy firms from Halliburton to Schlumberger and Occidental Petroleum, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
Had you spread $10,000 evenly across the top 10 S&P 500 stocks of the month, you'd have $12,555 now. That's not a repeatable strategy. But had you simply hit the top S&P 500 stock of the month, Halliburton, your $10,000 would be worth even more: $13,712.29.
Not bad for an ugly month for most investors.
Energy Ruled S&P 500 In January
January holds a special place in investors' hearts. And it's not due to particular strength: the S&P 500 usually only inches up 1% during the month.
More importantly, though, a strong January usually foretells a strong rest of the year, with nearly 85% accuracy, the Stock Trader's Almanac says. And unfortunately in 2022, the opposite is also usually true.
"As the S&P 500 goes in January, so goes the year," said Stock Trader's Almanac.
And there's no question where money was made in the rough month for the S&P 500: Energy. All 10 of the top S&P 500 stocks hailed from that one sector. And the monthly gains are giant — up to triple what the S&P 500 typically returns in an entire year.
"At current levels, crude is priced in line or even cheap (compared) to prior normal-to-peak levels," said Nicholas Colas of DataTrek Research. "We continue to believe that oil prices can trend higher and still like energy stocks here.
A Tough Month For The These Stocks
Scoring gains this January is no small feat. Talk about a rough month for the S&P 500. January didn't pan out how many would have liked.
The index threatened a correction all month, falling nearly 10% from its all-time closing high of 4,796.6. Investors lost $5.4 trillion in paper wealth in January alone, says Wilshire Associates.
But the pain is even more widespread than it appears. Ten of the 11 S&P 500 sectors, other than energy, dropped in the month. The Consumer Discretionary Select Sector SPDR ETF, which contains Tesla, plunged the most in the month: 13%.
And there weren't many places to hide in the S&P 500, either. Three-quarters of the stocks in the S&P, or 359, dropped during the month. And of those, half dropped by 10% or more. And that's just within the S&P 500. Smaller stocks fared worse, still.
But you could find S&P 500 winners if you looked in the right places.
Huge Gains By S&P 500 Energy Stocks
Spotting massive gains in S&P 500 energy stocks isn't all that surprising. Many are on the verge of reporting solid profits — thanks to swelling oil prices.
The price of light crude oil is up nearly 80% from its 52-week low price on the Nymex. And much of that's flowing straight to the bottom line of energy companies. Take Halliburton for instance. The Houston-based oil and gas refiner's shares are already up more than 37% this year.
And profit is to follow. Analysts think Halliburton's adjusted profit this year will jump more than 65%. Compare that with the seemingly tiny 9.5% profit rise analysts see coming this year in the entire S&P 500, says John Butters of FactSet. Energy companies, as a group, are expected to put up 36% higher profit in 2022 — more than any other.
So, don't get discouraged by a tough S&P 500. Keep your watchlist close, remember your buy rules and listen to the market.
Best Stocks In January 2022
How much $1,000 invested equally in each one in the month would be worth.
| Company | Symbol | January % gain | Sector | $1,000 invested in January worth now |
|---|---|---|---|---|
| Halliburton | 37.1% | Energy | $1,371.23 | |
| Schlumberger | 32.5 | Energy | 1,324.87 | |
| Occidental Petroleum | 29.6 | Energy | 1,295.96 | |
| ConocoPhillips | 23.6 | Energy | 1,236.08 | |
| EOG Resources | 23.5 | Energy | 1,234.94 | |
| APA | 23.4 | Energy | 1,233.54 | |
| Hess | 22.9 | Energy | 1,229.23 | |
| Exxon Mobil | 22.8 | Energy | 1,227.65 | |
| Marathon Oil | 20.8 | Energy | 1,208.28 | |
| Diamondback Energy | 19.4 | Energy | 1,193.51 | |
| Total value now of $10,000 invested in all 10 for the month | $12,555.31 | |||
| S&P 500 | $9,300 |
Sources: IBD, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz
