S&P 500 Winners For May

By Eric Fox | June 03, 2011 AAA

The best-performing stocks in the S&P 500 in May, 2011, benefited mostly from investor enthusiasm, which was created through beating earnings estimates and raising profit outlooks. These four companies exceeded expectations and led the pack.
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May's Best Performers
Dean Foods (NYSE:DF) was the best-performing stock, ending the month up 24%. The company reported earnings of 14 cents per share for the first quarter, beating analyst estimates of 6 cents per share. Dean Foods also raised the company's earnings outlook for 2011 to a range of 67-75 cents per share, up from the prior outlook range of 55-65 cents per share.

Macy's (NYSE:M) also had a great month, returning 20% to investors that owned this retailer. The company reported a same store sales increase of 10.8% for April, 2011, above guidance of 8-9%. This better performance led Macy's to raise its profit outlook for 2011 to a range of $2.40 to $2.45 per diluted share, compared to the previous earnings guidance of $2.25 to $2.30 per diluted share. The company also felt secure enough to double its quarterly dividend from 5 cents to 10 cents per share.

Electronic Arts (Nasdaq:ERTS) drifted higher all month, on the back of a solid financial report for the fourth quarter of fiscal 2011. The company reported non-GAAP net revenue of $995 million, above the guidance range of $850 million to $950 million, and also met the high end estimate on non-GAAP earnings, reporting 25 cents per share, compared to guidance of 15-25 cents per share.

Also helping performance during the month was pressure from Relational Investors, an activist hedge fund that owns a position in the company. Electronic Arts settled with Relational at the end of May, giving the group a seat on the board. The stock ended up 21% in May, 2011.

Netflix (Nasdaq:NFLX) returned 16% in May 2011, and also drifted steadily higher during the month due to a number of factors. The stock has what many technicians would call a bullish chart pattern and this momentum provided support during the month. Netflix also reported a steady supply of positive news bytes in May, including the signing of a distribution agreement with a major studio, and rumors about a potential partnership between the company and Facebook.

The Bottom Line

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