February wasn't a great month for the S&P 500. But it still presented angles to nearly double your money with stocks in just two months.
All told, had you invested $10,000 in January and reinvested your money into the top-performing stock currently in the S&P 500 each month in 2023, including Catalent (CTLT) in February, you'd have $19,631 now, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
That's an impressive 12-month gain of nearly 97%. It's quite a feat given the S&P 500 is up only 3.6% so far this year — after being up more than that in January alone. The same $10,000 invested in the S&P 500 would be worth just $10,360 now. That's a gain of just $360.
Did December Awaken The S&P 500 Bear?
Hindsight is 20-20. And clearly, few if any investors could have picked out the top stock in each of the past two months, as it's not a repeatable strategy. But the staggering numbers are a reminder to investors that gains can be found in a choppy market.
But it wasn't easy. February lived up to its reputation as a "weak link" month for the S&P 500, says the Stock Trader's Almanac. By losing 2.4% during the month, that's much worse than the S&P 500's 0.04% average loss in February going back to 1950, says the Almanac. February is the second to last month in terms of returns historically.
Making money in February took careful navigation of the risk-on-and-off volatility in the markets. S&P 500 investors are trying to gauge whether the Federal Reserve will stop hiking short-term interest rates this year.
"It seems a lot of traders are not confident in this rally as the economy still looks too strong for disinflation trends to resume," said Edward Moya at market research firm Oanda."The Fed has a lot more work to do, and that should be a difficult environment for stocks."
Top S&P 500 Stock Of December: Catalent
Catalent, a developer of drug treatments, was the S&P 500 stock to own in February. Shares shot up 26% during the month to 67.46, while the S&P 500 sank.
That's an impressive run following the stock's 19% gain in January. Just this year, the stock is up nearly 50%.
What did investors see in this stock while they were selling many others? Investors seemed relieved that the company reiterated its earnings guidance for fiscal 2023 ended in June. Catalent also confirmed that revenue in fiscal 2023 should hit $4.6 billion to $4.9 billion. That guidance was reassuring since fiscal 2023 is a bit of a rebuilding year. Analysts think the company's adjusted profit per share in fiscal 2023 will fall nearly 17%.
All eyes, though, are on fiscal 2024. That's when analysts see growth returning. The company is expected to post more than 12% higher adjusted profit per share of $3.59 on nearly 7% higher revenue of $5 billion.
Other big winners in February included some popular S&P 500 stocks that struggled in 2022. Shares of AI computing giant Nvidia jumped more than 20% in February on the promise surrounding ChatGPT, an online bot with the uncanny ability to answer most questions. Additionally, Elon Musk's electric-vehicle maker Tesla soared nearly 20% in the month.
Reading The S&P 500 This Year
Each month's twists and turns reveal just how challenging the S&P 500 is making things for investors.
The year kicked off with a bang. Not only did the S&P 500 jump 6.2% in just January, some winners during the month soared even more. Warner Bros. Discovery added more than 56% in just a single month.
And then came February with a pullback. Optimism that the Fed finally cooled inflation with its rate hikes is giving way to fear that more rate increases are to come. Three quarters of the stocks in the S&P 500 dropped in February.
Don't assume, though, that everyone is losing money.
How To Turn $10,000 Into $19,631 In 2 Months
|Month||Top S&P 500 stock||Symbol||Stock monthly change||Sector||S&P 500 monthly change||Starting balance||Cumulative value of $10,000 investment in January reinvested in best stock each month|
|January||Warner Bros. Discovery||56.3%||Communication Services||6.2%||$10,000||$15,630|
Sources: S&P Global Market Intelligence, IBD
Follow Matt Krantz on Twitter @mattkrantz