The S&P 500 generated a 12% return in the first quarter of 2012, rewarding intrepid investors that took a chance on riskier assets and put money to work in the stock market in 2012. (For more, see Earning Forecasts: A Primer.)

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

The Winners
Sears Holdings (Nasdaq:SHLD) bounced back from an abysmal performance in the final quarter of 2011, and doubled investors' money, returning 109% in the quarter.

The quarter did not start well for Sears Holdings, as the company was plagued by reports that CIT Group (NYSE:CIT) and other retail factoring companies had declined to provide short term loans to vendors that sell to the company.

After that, Sears Holdings began a huge upward trend, moving from below $30 per share to a high of $87.66. This rally ended in mid-March 2012, when the stock hit technical resistance and investors took gains.

Several other fallen stocks rebounded strongly in the first quarter of 2012, after being abandoned by investors in 2011. Bank of America (NYSE:BAC) and Netflix (Nasdaq:NFLX) were up 74 and 64%, respectively, in the first quarter of 2012.

Bank of America benefited from investors' perception that issues regarding European sovereign default have been temporarily resolved, as well as positive results of a Comprehensive Capital Analysis and Review (CCAR) conducted by the Federal Reserve.

The CCAR indicated that most large banks would have adequate capital under a hypothetical adverse economic scenario. These assumptions included a peak unemployment rate of 13%, a 50% decline in equity prices, and a 21% drop in housing prices.

This news lifted most bank shares during the quarter, with JP Morgan (NYSE:JPM) and Citigroup (NYSE:C) both moving up 40% in the quarter.

Whirlpool (NYSE:WHR) was up 61% in the quarter, with the performance generated by several positive events. The company signed a deal with Suning Appliance Co., Ltd., to distribute its merchandise through Suning's 1,700 retail outlets in China. Whirlpool hopes that access to this distribution channel will grow appliance sales in China to $1 billion.

Later in the quarter, Whirlpool reported fourth quarter of 2011 earnings that exceeded consensus estimates. The company also provided guidance for 2012 that was above what most investors were expecting.

The Bottom Line
The S&P 500 was up 12% in the recently ended quarter, providing the index's best first quarter return since 1998. Investors now need to decide whether this is the start of a great year in the market or the last gasp of a recent rally that will soon reverse. (For additional reading, check out 5 Must-Have Metrics For Value Investors.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  2. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  3. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  4. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  5. Investing News

    Chipotle Served with Criminal Probe

    Chipotle's beat muted expectations and got a clear bill from the CDC, but it now appears that an investigation into its E.coli breakout has expanded.
  6. Stock Analysis

    Analyzing Sprint Corp's Return on Equity (ROE) (S)

    Learn about Sprint's return on equity. Find out why its ROE is negative and how asset turnover and financial leverage impact ROE relative to Sprint's peers.
  7. Stock Analysis

    Why Alphabet is the Best of the 'FANGs' for 2016

    Alphabet just impressed the street, but is it the best FANG stock?
  8. Investing News

    A 2016 Outlook: What January 2009 Can Teach Us

    January 2009 and January 2016 were similar from an investment standpoint, but from a forward-looking perspective, they were very different.
  9. Mutual Funds & ETFs

    3 Vanguard Equity Fund Underperformers

    Discover three funds from Vanguard Group that consistently underperform their indexes. Learn how consistent most Vanguard low-fee funds are at matching their indexes.
  10. Investing News

    Alphabet Earnings Beat Expectations (GOOGL, AAPL)

    Alphabet's earnings crush analysts' expectations; now bigger than Apple?
RELATED FAQS
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center