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The Best Stocks Of 2009
Fortunes were made in the stock market in 2009; investors who didn't get caught up in the short-term frenzy that dominates investment thinking were able to pick up quality stocks trading at lifetime lows. Here we look at some of the best.
IN PICTURES: How To Make Your First $1 Million
XL Capital (NYSE:XL) was the No.1 stock in the S&P 500 in 2009, returning 398% to investors during the year. The company had the misfortune of owning a bond insurance subsidiary called Security Capital Assurance, which took heavy losses during the financial crisis. XL Capital distanced itself from this subsidiary, which has since been renamed Syncora, in the middle of 2008 through a large payment of cash and stock.
XL Capital reported operating profits and book value growth during 2009 and that has caused investors to bid the stock up all year.
Tenet Healthcare (NYSE:THC) also had an outstanding 2009, rising 352%. This hospital company began 2009 with many investors questioning the its ability to deal with the credit crunch and recession as the company's bad debt expense started to soar.
Instead, the company pulled off a $1.4 billion debt swap in early 2009 and extended its debt maturities out to 2015 and 2018. The company then saw operating improvement all year, and benefited from speculation that it would profit from the upcoming healthcare reform.
Advanced Micro Devices (NYSE:AMD) made it onto the top-performing stock list despite itself during 2009. The company lost money every quarter through September 2009, and analysts are estimating a fourth-quarter loss as well.
Despite the losses, AMD received a boost in late 2009 from a large legal settlement of $1.25 billion from Intel (NYSE:INTC). Advanced Micro Devices has also benefited from Intel's continued legal battles with the government. As a result, Advanced Micro Devices returned 350% for investors in 2009.
Ford Motor Co (NYSE:F) achieved fame during 2009 as the only domestic auto manufacturer not to accept financial aid from the government and not to file bankruptcy. Ford was up 336% in 2009, defying skeptics who thought the entire U.S. auto industry was destined to go down.
Genworth Financial (NYSE:GNW) was one of those financial stocks pronounced as dead, as it traded under a dollar twice over the least 12 months. The company suffered from problems common to many financials, including weak performance in its investment portfolio, ratings downgrades and soaring losses on mortgage insurance.
The company's supposed death knell came in April 2009, when the government announced that Genworth Financial would not get any government bailout money from the Troubled Asset Relief Plan (TARP).
Despite this, the stock finished 2009 at $11.35, returning 310% to owners and proving that the market is not infallible.
The Bottom Line
The unbelievable returns of many left-for-dead stocks in 2009 underscores the importance of discipline and rational thinking when considering investments. Investors who have these qualities were highly rewarded last year. (For more winners, check out Warren Buffet's Best Buys.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
IN PICTURES: How To Make Your First $1 Million
XL Capital (NYSE:XL) was the No.1 stock in the S&P 500 in 2009, returning 398% to investors during the year. The company had the misfortune of owning a bond insurance subsidiary called Security Capital Assurance, which took heavy losses during the financial crisis. XL Capital distanced itself from this subsidiary, which has since been renamed Syncora, in the middle of 2008 through a large payment of cash and stock.
XL Capital reported operating profits and book value growth during 2009 and that has caused investors to bid the stock up all year.
Tenet Healthcare (NYSE:THC) also had an outstanding 2009, rising 352%. This hospital company began 2009 with many investors questioning the its ability to deal with the credit crunch and recession as the company's bad debt expense started to soar.
Instead, the company pulled off a $1.4 billion debt swap in early 2009 and extended its debt maturities out to 2015 and 2018. The company then saw operating improvement all year, and benefited from speculation that it would profit from the upcoming healthcare reform.
Advanced Micro Devices (NYSE:AMD) made it onto the top-performing stock list despite itself during 2009. The company lost money every quarter through September 2009, and analysts are estimating a fourth-quarter loss as well.
Ford Motor Co (NYSE:F) achieved fame during 2009 as the only domestic auto manufacturer not to accept financial aid from the government and not to file bankruptcy. Ford was up 336% in 2009, defying skeptics who thought the entire U.S. auto industry was destined to go down.
Genworth Financial (NYSE:GNW) was one of those financial stocks pronounced as dead, as it traded under a dollar twice over the least 12 months. The company suffered from problems common to many financials, including weak performance in its investment portfolio, ratings downgrades and soaring losses on mortgage insurance.
The company's supposed death knell came in April 2009, when the government announced that Genworth Financial would not get any government bailout money from the Troubled Asset Relief Plan (TARP).
Despite this, the stock finished 2009 at $11.35, returning 310% to owners and proving that the market is not infallible.
The Bottom Line
The unbelievable returns of many left-for-dead stocks in 2009 underscores the importance of discipline and rational thinking when considering investments. Investors who have these qualities were highly rewarded last year. (For more winners, check out Warren Buffet's Best Buys.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Eric Fox
Eric J. Fox, CFA, is a freelance financial writer and has previous experience working in the asset management industry as an equity analyst and portfolio manager on the buy side. His favorite area to write on is the energy sector and he keeps current on the industry by reading Haynesville Shale, Permian Oil and Gas and various other blogs.
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