The Best Stocks of 2013: Which Large Caps Led the Market?

The Best Stocks of 2013: Which Large Caps Led the Market?

2013 was a great year for stocks, pretty much across the board. Though small cap securities led the way higher, large caps also had a banner year as well.

And while large cap benchmarks like the S&P 500 and the DJIA both added more than 20% on the year, a few big stocks managed to trounce this level and double—or more– on the year.  In fact, a handful of large cap stocks— those with over $10 billion in market cap—saw phenomenal returns in 2013 with three experiencing moves higher of more than 230% in the one year time frame.

Obviously, these incredible performances stole the show in the market, and many of the top stocks were among the most talked about securities of the year. For investors curious on which companies were the large cap all-stars of 2013, we have highlighted the three best performing large cap firms of the year below (though it is important to note that some didn’t start the year as large caps, but certainly finished 2013 in the above $10 billion market cap camp), and some of the key reasons behind their success:

Best Buy (BBY): 237% gain for 2013

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Best Buy Co., Inc. (NYSE:BBY) was easily one of the best turnaround stories of 2013. The company was largely left for dead thanks to intense competition from online retailers, but it has fought back to become an important player in the electronics retail market.

The firm has also managed to reinflate earnings, and thoroughly crushed expectations at the two previous earnings reports. In the most recent report, BBY delivered a surprise of 63% while two quarters ago it was expected to see earnings of 12 cents a share but produced an impressive 32 cents a share instead, leading to a huge surge in the share price of BBY.

Thanks to this new-found optimism, many investors became quite bullish on BBY and now believe that Best Buy may have found a way to compete with online behemoths. If this is the case, 2014 could be another great year for this resurgent company, though intense competition will be a force to be reckoned with this year.

Best Buy has a Zacks Rank #3 (Hold), but it currently has an industry Rank just outsized the top third.

large caps

Netflix (NFLX): 300% gain for 2013

Netflix always seems to find itself on either the worst or best performer list, and 2013 was no different. This time, Netflix was a star performer, driven by increased adoption of its streaming service and strong subscriber growth.

Original and award winning programs by Netflix are setting the company apart, and these programs are forcing many competitors to take note and adapt to this new competitive environment. After all, more people are signed up for Netflix than HBO, with close to 40 million members for NFLX.

Plus on the earnings front, Netflix has been extremely strong including four straight beats with an impressive 200% beat for the final quarter of 2012, which showed a surprise profit. Add this in to strong earnings estimate revisions and a rising consensus estimate for 2014, and there still may be a bit of room to run for NFLX.

Netflix, Inc. (NASDAQ:NFLX) currently has a Zacks Rank #1 (Strong Buy), and it is in a top 20% industry to boot.


Tesla Motors (TSLA): 325% gain for 2013

Arguably the most talked about stock of the year, Tesla Motors became an investor darling thanks to strong demand, cool cars, and the stewardship of Elon Musk. It also didn’t hurt that the stock started the year at $35/share and finished 2013 north of $150/share.

The real catalyst for this huge move was some surprising data on the earnings front earlier in 2013. For the quarter ending March 2013, according to our estimates, Tesla was expected to deliver a loss of seven cents a squeaked into profitable territory instead, marking its first quarterly profit in history.

And with boosted guidance and another solid earnings report, the stock really took off in the spring and the summer. Though there were definitely some bumps in the road leading up to the end of the year, TSLA appears well-positioned for long term growth, even if there will be some significant volatility along the way.

Tesla Motors Inc (NASDAQ:TSLA) now has a Zacks Rank #3 (Hold), while the impressive trends in the auto industry have pushed the industry rank to the top 25% level.


Bottom Line

These aforementioned stocks saw great trading in 2013, easily destroying the market’s returns. However, after such huge moves, this New Year might not be as favorable for these stocks.

Yet, with a great Zacks Rank for NFLX, and also solid Industry Ranks for BBY and TSLA, there may be a bit of gains left to be had in this outperforming trio as we head further into 2014. Either way, this is a group to keep an eye on in your watch list, and it is also further proof that large caps are still capable of market-trouncing gains, and that even big companies can turn around in a short period of time.

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