A Wonderful Year for These Stocks

There are few who would argue that 2008 was an annus horribilis, one of the worst years in memory for most investors. Yet not every company suffered equally; in fact, for a handful of stocks on the S&P 500, you could say it was a very good year.

Of the 500 companies comprising the Standard & Poor's index, 5% bucked the trend and ended up in the black. Below is the even smaller subset that managed to actually enjoy double-digit returns.


2008 Return

Family Dollar




H&R Block




Wal-Mart (NYSE: WMT  )


Celgene (Nasdaq: CELG  )


Rohm & Haas




AutoZone (NYSE: AZO  )


Gilead Sciences (Nasdaq: GILD  )


The index had one good day -- the first trading day of the year. The S&P peaked in the middle of the day, at three points above its value at the end of 2007, then fell for the day. It wouldn't get back to those heights all year, closing 2008 down 38%.

A theme park of trends
The Dow Jones Industrial Average didn't fare much better. Two of its 30 stocks -- Wal-Mart and McDonald's (NYSE: MCD  ) -- managed to close in positive territory for 2008. In May, it managed to reach the highs that it started the year with, but the Dow lost 34% on the year, its biggest loss since 1931. By comparison, the technology-laden Nasdaq was off more than 40%, the largest percentage decline in its 37-year history.

There were a few broad themes that seemed to highlight what these returns represented. First, you wouldn't have wanted your money in financial stocks in 2008, because they lost a combined 58%, followed by materials at 47% and energy stocks at 36%.

Such failures were the scourge of some otherwise brilliant financial strategists. Bill Miller, who had an extraordinary run of beating the S&P for 15 years at Legg Mason before seemingly losing his mojo, kept positioning his mutual funds to profit from an economic recovery that never materialized. His funds were heavily invested in financial stocks, homebuilders, and Internet companies like (Nasdaq: AMZN  ) and Yahoo! (Nasdaq: YHOO  ) , which dropped 45% and 48%, respectively, in 2008.

A bull market in value
Saving money and providing consumers with great value seemed to be one of the positive themes. Deep discounters Family Dollar and Wal-Mart, for example, represented ways consumers were able to save money, while the dollar menu at McDonald's meant you could still find an affordable meal.

Another year of miracles?
Discerning such trends is always easier with hindsight. The challenge for investors, of course, is to gaze into their crystal balls to ascertain whether we have a repeat of last year, or an annus mirabilis.

Wal-Mart and Legg Mason are Motley Fool Inside Value recommendations, and the Fool owns shares of Legg Mason. Hasbro and are Stock Advisor selections. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Duprey owns shares of Wal-Mart but does not have a financial position in any of the stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.

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