The Best Stocks for 2009, Revisited

Around this time last year, 14 different Fools pitched you their best stocks for 2009. Given the tumultuous market backdrop at the time, it's perhaps no surprise that many of us leaned on blue chip firms like Pfizer (NYSE: PFE  ) and Johnson & Johnson (NYSE: JNJ  ) to carry us through what appeared to be very tough times ahead. Taking a look at the best and worst performers should be instructive as to what sort of year it actually turned out to be.

Let's begin with the leaders:

Company

Total Return YTD, Through Dec. 21

Amazon.com (Nasdaq: AMZN  )

159.0%

Starbucks (Nasdaq: SBUX  )

144.6%

Google (Nasdaq: GOOG  )

94.6%

Core Laboratories

93.1%

Data courtesy of Morningstar.com.

First off, I have to doff my jester's cap to Tim Beyers and Alyce Lomax for their blazing picks, which are currently in a dead heat for top stock pick. Tim highlighted a hidden asset in Amazon's budding cloud computing business at a time when most other investors were solely focused on the retail operations. Alyce's contrarian call on much-maligned Starbucks, which she identified as being "near or at the point of maximum pessimism," really went against the grain -- and paid off big time.

Second, it's worth noting that this quartet of supernova stocks posted uniformly poor returns in 2008. All but Amazon had seen their shares cut by more than half. That says a lot about the kind of year the market had in 2009: huge bounces off of huge declines. Google and my pick, Core Labs, nearly doubled this year, but they still trade below where they were at the outset of 2008. Fundamentally weak outfits have had much more extreme moves, in both directions.

As Alex Dumortier documented back in August, junk stocks boasted much bigger bounces than quality names this year. Rock-solid J&J, which was the fan favorite according to your CAPS votes, barely turned out a double-digit return this year. Another quality underperformer tops our laggards list:

Company

Total Return YTD, Through Dec. 21

ExxonMobil (NYSE: XOM  )

(12.1%)

General Electric (NYSE: GE  )

(0.7%)

Somanetics

1.9%

Agnico-Eagle Mines

4.1%

Data courtesy of Morningstar.com.

ExxonMobil, a bulletproof stock if I've ever seen one, posted the only substantially negative return out of the entire group. The firm's proposed acquisition of XTOEnergy recently took a bit of air out of the shares, as is typical of large merger situations. ExxonMobil held up extremely well during last year's crash, and the price of that protection seems to be a lack of participation in the ensuing rally.

GE, however, brought the worst of both worlds: a harrowing drop in 2008 followed by a breakeven result in 2009. Rich Smith praised the firm's world-class industrial businesses, but overlooked GE's financial exposure. That's exactly the same mistake I made at the outset of 2008. Agnico's modest return doesn't look terrible unless you compare it to the other gold miners. Chris Barker has some updated thoughts for you on this mid-tier marauder.

There's no doubt that 2009 went a lot better than 2008 did for most stock investors. Here's to hoping that next year continues this year's winning ways!

Now it's your turn to weigh in on 2010. Tell us your pick for next year's best stock.

Pfizer is an Inside Value pick. Google is a Rule Breakers recommendation. Amazon.com and Starbucks are Stock Advisor selections. Johnson & Johnson is an Income Investor pick. Check out any of our premium newsletters free for 30 days.

Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his CAPS profile or follow his articles using Twitter or RSS. The Motley Fool owns shares of Starbucks and XTO Energy and has a disclosure policy.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 22, 2009, at 4:37 PM, exGEer wrote:

    Breakeven results in 2009 for GE. Jeff Immelt sure earned his $14 million salary this year! He's the most over-paid, over-hyped, under-performing, and under-qualified of any CEO in the fortune 100.

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