What's been one of the easiest ways to make big money on stocks this year? Pick up stocks in and out of the S&P 500 other investors left for dead in 2022.
Ten stocks, including superstar S&P 500 stocks Meta Platforms and Tesla, soared 60% or more this year after crashing that much or more in 2022, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. They're among the biggest winners this year, with the S&P 500 itself up 18%.
The rapid rise in fortunes of some of biggest stock losers just a year ago shows in dramatic form how investors have flipped from fearful to greedy as the S&P 500 climbs. Investors are buying nearly anything with a ticker symbol.
"With the market rising faster than the temperature this summer, we can't say we were surprised this morning to see that individual investor sentiment as measured by the American Association of Individual Investors (AAII) has turned bullish," said Bespoke Investment Group. "In this week's survey, the percentage of bullish respondents increased from 41% to 51.4%, which is the highest level since April 2021."
Other Investors' Trash Is Now Treasure
It's remarkable to see how fast investors' opinions on such a broad swath of stocks changed so quickly. And it's not just a few high-profile cases.
Shares of the 46 stocks in the S&P 500, S&P Smallcap 600 and S&P MidCap 400 index that plunged 60% or more in 2022 gained an average 32% this year. That's roughly twice the S&P 500's rise this year.
The most dramatic example of a turnaround is Arlo Technology, a maker of security and online video monitoring systems. Shares of the company tanked more than 66% in 2022. Investors grew tired of the stock's perpetual money-losing ways. It had lost money every year from 2019 to 2022.
But this year, it's one of the hottest stocks around. Shares are up more than 206% this year so far to 10.74 each, more than rewarding investors spotting the turnaround. And there's profit to back up the stock enthusiasm. Analysts think the company will turn a profit this year of roughly $19 million on an adjusted basis, or 21 cents a share.
Big Losers Turn Into Huge Winners
Perhaps the biggest example of a turn from hated stock to beloved is Meta Platforms, the company operating Facebook.
Shares plunged more than 60% last year as investors resisted the company's heavy spending on money-losing virtual reality plans. Consumers didn't want the headsets the company was selling. And during the distraction, rivals like TikTok gained market share in the now-lucrative social media market. Meta even dropped out of the rolls of the top 10 most valuable S&P 500 companies.
But all that's changed in 2023 — and fast. CEO Mark Zuckerberg redoubled the company's efforts in social media, including launching a Twitter rival called Threads. Shares of the company are up more than 151% this year, allowing it to reclaim its position as one of the so-called Magnificent Seven stocks.
Similarly, Tesla shares are revving up. The electric vehicle maker's stock is up more than 113% this year to 262.9, primarily on optimism over its charging network and electric truck. And that gain is a big reason why ARK Innovation's Cathie Wood is back on top of all U.S. diversified ETFs this year.
Savvy investors know it's best to focus on leading stocks to optimize long-term returns. But for now, scooping up other investors' panic sells is proving to be a good way to make money fast.
Rising From 2022's Ashes
S&P 1500 stocks up 60% or more this year after falling that much or more in 2022
| Company | Ticker | 2022 % ch. | YTD % ch. |
|---|---|---|---|
| Arlo Technologies | -66.5% | 206.0% | |
| Meta Platforms | -64.2 | 151.4 | |
| Sotera Health | -64.6 | 126.8 | |
| Tesla | -65.0 | 113.4 | |
| PROG Holdings | -62.6 | 113.4 | |
| World Acceptance | -73.1 | 107.4 | |
| eXp World Holdings | -67.1 | 103.4 | |
| Allegiant Travel | -63.6 | 88.5 | |
| NeoGenomics | -72.9 | 86.3 | |
| B. Riley Financial | -61.5 | 64.9 | |
