For six years now, investors have looked with skepticism at the rise in the stock market. And for a sixth straight year, the markets defied those who were waiting for a major downturn to invest, with the S&P 500 climbing about 14% including dividends and the Dow Jones Industrials posting a nearly 10% total return.
At the beginning of the year, 2014's gains seemed far from a sure thing. The Federal Reserve had announced the end of quantitative easing, which most investors incorrectly believed would lead to a spike in interest rates and prove to be the catalyst for a major market correction. Moreover, throughout the year, events like the conflict between Russia and Ukraine, new eruptions of violence in the Middle East, and the plunge in oil prices posed challenges for investors trying to navigate the perils of the markets. Still, the resiliency of the stock market won out in the end, once again showing how hard it is to make short-term predictions about the market's direction.
Investors have equally uncertain views about how 2015 will turn out. But understanding the trends that created 2014's winners can shed at least some light on where you should focus your attention in the coming year. To help do that, the slideshow below has the top 10 performing stocks of 2014 among companies that had at least $300 million in market capitalization coming into the year.
The most obvious theme of the year was that pharmaceutical and biotechnology stocks had a stellar 2014. The buyout of Avanir Pharmaceuticals (UNKNOWN:AVNR.DL) sent the promising small drugmaker to gains of more than 400%, and the general optimism about prospects for biotechnology played a major role in sending Agios Pharmaceuticals (NASDAQ:AGIO), bluebird bio (NASDAQ:BLUE), and Receptos (UNKNOWN:RCPT.DL) to 300%-plus returns in 2014.
But beyond the healthcare sector, you'll find plenty of other promising stocks. Airlines were one of the best-performing industries in the market in 2014, as falling fuel prices and continued strong sales drove success even for the best-known airline companies. But Hawaiian Holdings (NASDAQ:HA) topped the list by climbing 170%, as the company known for providing inter-island service to travelers in Hawaii benefited from a lack of competition and rising interest in the tropical vacation destination, from both the U.S. and Asia.
Similarly, Skyworks Solutions (NASDAQ:SWKS) capitalized on the continuing importance of the mobile revolution, finding itself prominently featured in the latest devices from major manufacturers across the globe. Yet many believe the Internet of Things will produce even greater opportunities for Skyworks, as its connectivity chips will play a vital role in getting information to where it's needed most.
After such huge gains, these stocks probably won't be the leaders of 2015. But by understanding how they got to their positions of prominence in 2014, you can draw some insight into the kinds of companies that have the most potential to make this year's top 10 list when 2015 comes to a close.
Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of Skyworks Solutions. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.