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The S&P 500's 3 Best Stocks in May

Many people argue that it's smart to sell in May, but the S&P 500 (SNPINDEX: ^GSPC  ) proved them wrong, at least for this month. The S&P 500 gained more than 2% and ended the month at a record closing high, standing less than 4% below the 2,000 mark. Almost three-quarters of the stocks in the S&P 500 contributed to its strong monthly performance. But the top three performers for the month of May were Netflix (NASDAQ: NFLX  ) , Electronic Arts (NASDAQ: EA  ) , and TripAdvisor (NASDAQ: TRIP  ) , all of which rose 20% or more and were particularly instrumental in pulling the S&P 500 to new highs.

Netflix gained almost 30% as investors started to believe in the long-term growth prospects for the video-streaming company. In particular, Netflix announced a major initiative to bolster its presence in Europe, with plans to add six more countries to its lineup of international markets. Given the success that Netflix has had both in the U.S. and abroad, building itself into a true global force in video entertainment is not only a natural progression for the company but also its best strategy for maximizing profits. Combined with plans to raise prices for new members, Netflix is looking to monetize its content more effectively, and investors like what they're seeing.

Source: Electronic Arts.

Electronic Arts soared 24% as its own quarterly results were far better than investors had expected. Sales dropped 12% from the year-ago period, but adjusted earnings were more than quadruple what most shareholders looked for from Electronic Arts. Moreover, Electronic Arts projected that its current-quarter loss would be far smaller than most investors thought. With the video game company aiming at making digital downloads account for nearly all of its revenue in the long run, Electronic Arts wants to keep all possible profit for itself rather than sharing with either specialty video game retailers or big-box electronics stores.

TripAdvisor rose 20% as the online-review website boosted its guidance for the remainder of the year and also announced a key growth initiative of its own. TripAdvisor's earnings actually missed analyst estimates, but investors chose to ignore that dip in favor of better forward-looking results. In particular, its metasearch feature could help TripAdvisor get more ad revenue. Moreover, TripAdvisor's purchase of an online restaurant-reservation service will challenge some key competitors and add another avenue for TripAdvisor's growth, further exciting shareholders.

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Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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Related Tickers

9/1/2015 4:35 PM
^GSPC $1913.85 Down -58.33 -2.96%
S&P 500 INDEX CAPS Rating: No stars
EA $63.43 Down -2.72 -4.11%
Electronic Arts CAPS Rating: ***
NFLX $105.79 Down -9.24 -8.03%
Netflix CAPS Rating: ***
TRIP $68.19 Down -1.71 -2.45%
TripAdvisor CAPS Rating: ****