For Wall Street and investors, this has been one heck of a trying year. No matter your level of investing experience, nothing could have prepared folks for the roller-coaster ride the stock market has been on since mid-February due to the coronavirus disease 2019 (COVID-19) pandemic.
While most stocks have given investors a bit of whiplash -- which is to be expected when the S&P 500 loses a third of its value in five weeks and then delivers its strongest quarterly gain in 22 years in the subsequent quarter -- three well-known stocks have done what they always seem to do: gone up.
The following three companies were already riding an incredible 11-year winning streak into 2020 (based on total return, inclusive of dividends paid), and they've continued their winning ways through the first six-plus months of the year.
Perhaps the most well-known stock that just can't be stopped is warehouse club operator Costco Wholesale (COST 0.23%). Though its share price has been whipsawed a bit in 2020, Costco is currently higher by 6% for the year and a cool 128% over the past five years. With the exception of 2016 (and 2020 thus far), Costco has generated a double-digit total return for its shareholders every year since 2008.
Though there are a number of reasons Costco just keeps winning, its memberships play the biggest role. These annual memberships, which start at $60, provide high-margin revenue that allows Costco to undercut other retailers on price. Plus, paying for a membership makes it far likelier that a customer will purchase products within Costco's ecosystem rather than shop anywhere else.
Costco also benefits from its bulk-buying tactics. It's no secret that buying product in bulk nets Costco a cheaper base price. The company is then able to pass along these savings to its paying members, as well as to use these low prices as a lure to bring in new members.
As one final note, there's no question that COVID-19 has helped Costco. Bulk buying on the consumer end has been a blessing for the entire grocery and warehouse industry. It would be a real surprise if Costco didn't lock in its 12th consecutive year of gains when the curtain closes on 2020.
Cue Queen's hit song "Don't Stop Me Now," because electric utility NextEra Energy (NEE -0.74%) has proved to be virtually unstoppable over the past 11-plus years. Following a shaky March that saw NextEra, at one point, lose 25% of its value, the company's stock is now up 2% on a year-to-date basis through July 6.
The single most important catalyst for NextEra Energy continues to be its focus on green-energy projects. No company in the U.S. is generating more capacity from solar and wind power than NextEra, and that's unlikely to change anytime soon. NextEra is continuing to invest tens of billions into its infrastructure and has plans to install 30 million solar panels by 2030 (the "30-by-30" project) to generate another 10,000 megawatts of capacity. Though these investments remain pricey, they ultimately result in significantly lower electricity production costs on a per-kilowatt-hour basis. In other words, this is what allows NextEra's earnings growth to trounce those of its electric utility peers.
Furthermore, NextEra Energy should benefit from historically low lending rates. With the company often financing green projects with debt, it's the perfect time for NextEra to borrow money and further transform its production portfolio.
Also, don't overlook the fact that NextEra Energy's traditional utility operations are regulated. While this keeps NextEra from imposing price hikes at will, it also means no exposure to potentially volatile wholesale electricity pricing. It's this consistency and green energy push that have NextEra on track for its 12th straight winning year.
Another practically unstoppable stock for 12 years and counting now is health insurance and health systems optimization company UnitedHealth Group (UNH -0.09%). You might not think of health insurers as top-performing stocks, but UnitedHealth's total return has topped 36% in 5 of the last 11 years. With its stock down as much as 34% in March, UnitedHealth's 3% year-to-date return is more impressive than it sounds.
Ironically, one of the things that makes UnitedHealth Group tick is the lack of healthcare reform at the congressional level. Though there have been numerous instances in which lawmakers have homed in on the idea of bringing down drug prices or reforming the insurance industry, most of the time, no change is enacted. This allows UnitedHealth excellent long-term visibility and is a key reason it's able to continue increasing health insurance premiums.
In terms of growth drivers, UnitedHealth has leaned on Optum to a greater degree in recent years. Optum's purpose is to improve the operating efficiency of healthcare systems. During the COVID-19-impacted first quarter, Optum's revenue skyrocketed 25% to $32.8 billion, which essentially accounts for half of UnitedHealth's consolidated sales. Though OptumRx's prescription drug fulfillment comprises a significant portion of Optum's total sales ($21.6 billion out of $32.8 billion), the faster-growing analytics and health operations segments are what should drive operating margins higher over the long term.
With UnitedHealth Group expected to benefit from an increase in personal health insurance demand due to COVID-19, look for the company to make a serious run at extending its streak to 12 straight years of gains.