These Were the Best and Worst Stocks of 2021
It’s fun to look back at the year and see what stocks performed the best and worst. The results from the previous twelve months help to tell the story of the year in some ways, even if it can result in second guessing and kicking oneself over missed opportunities. Then again, I find when most people look back at the year-that-was it is easy to say, “Oh I would have done that,” when looking at a high performing stock, but no one ever really says, “Oh actually I would have invested there and I’m glad I didn’t,” when looking at the worst performing stocks. Our instincts in retrospect are always pretty aggressive the high side and fairly conservative on the downside.
Keeping in mind that stocks rise and fall in value for all kinds of reasons, none of which are confined to any specific 12-month interval, here were the best and worst performing stocks for 2021 (with one trading week left to go in the year). I am choosing to look at only the S&P 500 for now (more on the Dow Jones later in the article):
Top 10 Best Performing Stocks
Devon Energy Corporation (DVN): +165.97%
Marathon Oil Corporation (MRO): +139.88%
Moderna Inc. (MRNA): +139.29%
Signature Bank (SBNY): +136.33%
Fortinet Inc. (FTNT): +134.98%
Ford Motor Company (F): +130.38%
NVIDIA Corporation (NVDA): +127.04%
Diamondback Energy Inc. (FANG): +118.88%
Nucor Corporation (NUE): +114.89%
Gartner Inc. (IT): +103.21%
Other notable well-performing stocks and their ranking for the year within the S&P 500 include:
#30: Alphabet Inc. Class C (aka Google) (GOOG): +67.98%
#46: Pfizer (PFE): +59.49%
#87: Home Depot (HD): +49.49%
Before circling the drain of the S&P 500 for the year, a quick trivia question: how many stocks are in the S&P 500? Answer: 505. Why not just 500? Because several companies have two classes of shares, each of which is listed separately. Alphabet/Google, for example, has Class A shares and Class C shares. The returns are typically almost identical for the different share classes, but they are listed separately.
The S&P 500 as a whole was up 27.59% for the year (25.82% from price + 1.77% from dividends). With these results it was clearly a strong year for stocks, which was fueled by a steadily recovering economy boosted by multiple rounds of stimulus and interest rates that have been consistently and forcibly held low for nearly two years. Of the 505 stocks in the S&P 500 index over the past year, 425 of them have been positive.
Top Ten Worst Performing Stocks in the S&P 500
It was not a good year for everyone, however. There were 80 stocks that have had a negative return in 2021 include some surprising names like Visa (-0.96%), FedEx (-2.23%), Walmart (-3.23%), Biogen (-4.60%), Walt Disney Corporation (-15.21%), and Twitter (-18.45%) all dropping in value on the year. But none of those were among the absolute worse. Here are the ten worst performing stocks in the S&P for 2021:
Wynn Resorts (WYNN): -21.23%
Lamb Weston Holdings (LW): -21.58%
Fidelity National Informational Services (FIS): -22.91%
IPG Photonics Corporation (IPGP): -24.53%
Citrix Systems Inc. (CTXS): -24.77%
Viatris Inc. (VTRS): -27.27%
MarketAxess Holdings Inc. (MKTX): -28.02%
Activision Blizzard (ATVI): -29.82%
Las Vegas Sands Corp. (LVS): -35.25%
Global Payments Inc. (GPN): -37.16%
Penn National Gaming Inc. (PENN): -40.49%
Each one of these companies has its own story, although it is notable that there are three different gambling companies on the list, all of which got hammered during COVID.
Again, the calendar year is somewhat arbitrary. Consider Penn National stock, for example, which bottomed out below $8/share in March of 2020 at the outset of COVID and roared all the way up to $130/share in March 2021, which was fueled in part by investor enthusiasm after the company made a significant investment in Barstool Sports. The stock then has deflated all the way back to $51/share, which is where is stands today. So your feelings towards the worst performing stock of 2021 in the S&P 500 might depend a lot on when you bought it: if you bought PENN in March 2020 you might still feel good (although the last few months haven’t been particularly inspiring). If you bought it in March 2021, undoubtedly you would not feel good at all.
The same phenomenon is true among the top performing stocks, too. Consider Devon Energy, the #1 stock in the S&P 500 for 2021. It’s share price as of today is $42.05, which is almost exactly where it traded four years ago! So yes, Devon Energy had a great 2021, but the story over the past few years as a whole has not been particularly inspiring if you are an investor in the company.
A Few Additional Notes
I chose the S&P 500 because it is a broad index of 500 of the most prominent U.S. publicly traded companies. There is also the NASDAQ, which contains more than 3,300 stocks, but the top ten list for the NASDAQ is not entirely relevant; the top ten for 2021 is made up of a smattering of penny stocks and other tiny companies that just happened to hit it big this year for a variety of reasons. In fact, of the top ten highest performing NASDAQ stocks I don’t even recognize a single name.
The Dow Jones is the most traditional of the U.S. stock indexes. People don’t always realize, however, that the Dow contains just 30 stocks. By comparison, the S&P 500 is a much broader index that more accurately reflects the stock market as a whole. The Dow is older and still seems to get more prominent placement in the financial news, though, which is why more people tend to follow it. But the S&P 500 is really a more comprehensive index. Nonetheless, of the 30 stocks in the Dow Jones, 21 have been positive for the year, led by Microsoft (+50.48%), Home Depot (+49.49%), Goldman Sachs (+46.01%), and UnitedHealth Group Inc. (+41.26%). Dow laggards for the year include Disney (-15.21%), Verizon (-10.33%), and Merck (-7.42%).
Betting on the Worst
If I had unlimited time and resources and The Sunday Morning Post had an in-house research team, one strategy I would like to analyze is whether a portfolio that invests in the worst performing stocks in one year outperforms the market in the next year. Or, conversely, if investing in the top performing stocks in one year will actually underperform the following year, which intuitively would make sense in some ways. After all, the expression is “Buy Low, Sell High,” not “Buy High and Hope it Keeps Going.”
But consider this: of the five top performing stocks one full year ago in 2020, four out of five of them (Tesla, Etsy, NVIDIA Corporation, and L Brands/Bed Bath & Beyond) all outperformed the market as a whole in 2021. The only one that didn’t was PayPal, which was the #4 performer in the S&P 500 in 2020 but lost 18% in 2021, which made it one of the worst performers in the index. But other than PayPal, four of the five top performers in 2020 continued to do well in 2021.
On the opposite side of the coin, of the five worst performing stocks in the S&P 500 for 2020, only two of them achieved a positive rate of return for 2021: Occidental Petroleum and Marathon Oil. The other three continued to languish: Carnival Cruise Lines (2.12%), Norwegian Cruise Lines (-10.66%), and TechnicFMC, the latter of which was actually removed from the S&P 500 in 2021 but continued to trade on the NYSE, dropping 12.34% for the year.
So in recent history, the top performing stocks have, in general, continued to perform well, while the losers have continued to struggle. You can come up with infinitive models and theories to try to explain market moves and I am sure there is a formula out there along the lines of, “If you buy a stock ranked #1-20 but not #16-18 it will continue to do well while stocks ranked #67-73 typically outperform in the following year.” At a certain point you are just doing what economists and social scientists call “data fitting,” which means to come up with a theory to match the data rather than actually testing neutral hypotheses.
Undoubtedly in investing a model along these lines that works one year might not the next and vice versa. So in the end, the same old investment advice is typically accurate: buy and hold a diverse portfolio, stay in control of your emotions, and think long-term. It is fun to play around with smaller amounts of money investing in individual stocks if you have the time and resources to be able to do so (and you are not afraid to potentially lose some money), but in my previous experience as an investment advisor and someone who has spent a lot of time thinking about these things, most investors are best off with a low cost, passively managed investment fund rather than messing around with things too much. I know that is not the most fun advice, but it’s what I recommend.
From the Sunday Morning Post archives: How to Invest Small Amounts of Money
Ben Sprague lives and works in Bangor, Maine as a V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Follow Ben on Twitter, Facebook, or Instagram and subscribe to this weekly newsletter by clicking below.
Author’s Note: no Weekly Round-Up this week because I have been busy with Christmas and other family activities. See you next week as we look ahead to 2022! Got topics you want me to write about? Comment below or send me an email at ben.sprague@thefirst.com or bsprague1@gmail.com.
Disclaimer: this article is meant for education and entertainment and should not be considered investment advice. Thoughts and perspective do not represent First National Bank. Consult a CPA, investment advisor, and attorney before making investment decisions.