S&P 500 investors who sold in May and went away didn’t miss much. But that’s not to say giant gains couldn’t be had in the fifth month of the year.
A handful of S&P 500 stocks including information technology play NortonLifeLock (NLOK), consumer discretionary Ford Motor (F), materials company Nucor (NUE) and Baker Hughes (BKR), soared 20% or more just in the month of May alone, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
What’s that mean for your portfolio? All told, had you invested $10,000 in January and reinvested your money into the top stock currently in the S&P 500 each month this year, including in May, you’d have $46,121 now. That’s a remarkable five-month gain of 362% from holding five stocks. That even beats the impressive rise in the S&P 500 this year so far, which turned a $10,000 investment into $11,182.
Investors willing to pinpoint sectors inside the S&P 500 are making some serious money — even as S&P 500 gains slow.
“The economy has a great recovery going, but it is not clicking on all cylinders,” said Edward Moya, senior market analyst at Oanda.
Top S&P 500 Stocks In May 2021
|Company||Symbol||May % Gain||Sector||Composite Rating|
|Ford Motor||(F)||28.9%||Consumer Discretionary||77|
Sources: IBD, S&P Global Market Intelligence
S&P 500’s Solid 2021 Continues
Massive May gains are especially impressive as the S&P 500 itself put up its lowest monthly gain since January.
The S&P 500 inched up just 0.5% in May. But the average’s ho-hum month — largely due to lackluster showings by big-cap tech and tech-related stocks that dominate the S&P 500 — masks some much better performance by other individual stocks. The average S&P 500 stock during the month is up 1.7%.
But each month continues to present powerful money-making opportunities inside the S&P 500. And May is no exception in what’s been a string of monthly gains since January.
Hindsight is 20/20. And clearly, few if any investors could have pulled this off as it’s not a repeatable strategy. But the staggering numbers are a reminder to investors that gains can be enormous even more than a year into a bull market with continued market leadership. And that’s even the case as momentum continues to shift into more “value” oriented parts of the S&P 500.
The Rise Of S&P 500 Cyclical Stocks
Ford is a hot S&P 500 stock?
Ford is just one example of the rise of stocks tied directly to the ups and downs of the economy. And Ford jumped more than 28% in May, hitting its highest level in six years. Ford is the top-performing S&P 500 stock in May. It’s a remarkable turnabout, with the legacy automaker’s shares outperforming the “disruptor,” Tesla (TSLA). Shares of Tesla sank more than 11% in May, the fifth-worst showing of any S&P 500 stock. Should you buy Ford or Tesla stock now?
But Ford is far from the only cyclical play dominating in May. Steelmaker Nucor jumped 22.8% in May. Investors are bullish that the economy’s reopening and big U.S. spending plans on infrastructure will jump-start steel demand. Analysts think Nucor’s profit will jump more than 180% this year to $12.56 a share. And revenue is expected to jump more than 48% to $29.9 billion in 2021.
NortonLifeLock Caps Off A Powerful S&P 500 Run
That’s not to say S&P 500 tech stocks are completely out of the picture. It’s just that smaller, less-known tech stocks are putting up the biggest gains.
NortonLifeLock, a company that sells services to protect consumers’ computers and identities, is the No. 2 top performing S&P 500 stock in May. It jumped 28% in the month of May. Analysts think NortonLifeLock’s adjusted profit per share will jump nearly 19%.
And it stood out as many giant technology stocks languished during the month. The Technology Select Sector SPDR FUND (XLK) fell 2.6% during May. That’s the second-worst showing of any of the 11 sectors.
And when you look at the five stocks that did best in each month this year, not one is in the technology sector. But that doesn’t seem to matter for S&P 500 investors who know how to find the new leaders.
Top Current S&P 500 Stocks Each Month In 2021
Being in the right stock each month turned $10,000 into $46,229
|Month||Top S&P 500 Stock||Symbol||Stock Monthly % Gain||Sector||S&P 500 % Monthly Ch.||Beg. Bal.||Cumulative Value Of $10,000 Investment In January Reinvested In Top Stock Each Month||Composite Rating|
|January||Discovery, Inc.||(DISCA)||37.7%||Communication Services||-1.1%||$10,000||$13,770||32|
|February||Marathon Oil Corporation||(MRO)||53.3%||Energy||2.6%||$13,770||$21,109||54|
Sources: IBD, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz
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