The Biggest Market Winners of 2014
On the whole, 2014 was a great year to have your money in any of the major Fortune 500 stocks. The Dow Jones climbed climbed by nearly a thousand points during the calendar year and never threatened to dip below 15,000 points. It appears the recession is over, or at least more comfortably within the rearview mirror, and the bull market has come out to play. What were the biggest gains in 2014, and which stocks appear poised to continue the trend in 2015?
How does an energy company make record profits at the same time that the price of fossil fuels is plummeting towards the earth? Simple: you close the financial year just as the peak of fossil fuels hits. Newfield had the supreme luck of ending the fiscal year just as oil dropped from over $100 per barrel to just under $50 today. Their success is an example of the importance of good timing with regards to stocks: they opened the 2014 year at about $22 a share, closed the year with $45 a share, and can be purchased at the close of the market today for $24.60. The lesson here is simple: always double down on both commodities and stocks of companies that produce commodities in order to ride a wave ever higher, then be certain to get out when the needle starts to fall back down.
Keurig Green Mountain
If you've ever stepped foot in an office, bank, gym, or any place where there is coffee available to the public, you've likely seen the Keurig plastic containers for those who want a quick cup of joe. There are enough Keurig containers currently in circulation to travel to the moon and back ten times due to the popularity of the pint-sized pick-me-ups. The popularity is reflected in their stock gains during 2014, shooting up by no less than 78%. That's not the big story, though -- if you owned stock in Keurig five years ago, you would be enjoying 567% gains on the investment, which is practically unheard of short of insider trading. There's several reasons for the rise in Keurig's banner, but most are tied to the cost of coffee itself. Coffee was the biggest soft commodity performer in 2014, vastly eclipsing cocoa, orange juice, cotton, and sugar. Will Keurig's stock continue to rise in 2015? There's no reason to think why not: compare it to Starbucks stock, which thrived during the recession and is stronger today than it's ever been. Keurig's business model is arguably on par or even better than their franchise-based competitor. They've found a perfect solution to address a major market with a bare minimum of resources.
If you've switched on your television at any point in the past year, you've probably seen commercials that are effectively telling you why you should invest in Southwest: new airports, new planes, new routes. Americans love the innovation of the budget airline that has cut back on absolutely everything to give them a cheaper plane ticket. As the cost of jet fuel declines due to the lowered value of petroleum, their flights will return even greater profits to shareholders after surging by 71% in 2014. While competitors like JetBlue are up-and-coming, Southwest is making plans to go overseas, leaving the traditional airlines in major trouble. While Southwest probably won't repeat a top-10 performance in 2015, there's no reason to think it's not a surefire candidate for consistent growth in the immediate future.
Gamers will rush to tell you that EA is a punching bag in the industry, releasing buggy and frustrating games. While EA can't compete with bigger boys like Activision for Games of the Year, they can certainly hang their hat upon the success of their sports franchises, particularly the (American) football series Madden and the (European) football series FIFA. Both launched new titles in 2014 for both the Xbox One and the Playstation 4; due to the extreme popularity of both titles in addition to the relative lack of flagship games for the new consoles they moved huge quantities of copies. EA's stock shot up by 65% even though they came close to winning their third-straight Worst Company Award in 2014 (Comcast deservedly took home that title and ended the EA dynasty). They almost certainly won't repeat the performance in 2015, however: though a new Madden and FIFA title will sell well, they don't have the advantage of a poor market for competitors and the launch of two new gaming consoles. Sell high on EA if you've got shares in your portfolio.
Marketing can do a lot for a product that doesn't otherwise stand out from the crowd; just as Apple Computers. Under Armour is one such brilliant example of excellent marketing. You won't run faster, jump higher, swing harder, or shoot better with Under Armour sports equipment, but there are millions of poeple who don't just believe they will but are willing to pay for the privilege. The workout clothing line had a banner year in 2014 by hawking everything from gym shorts to yoga pants to running shoes to hiking jackets, growing to the tune of 57%. What's been their secret? Simple: celebrity endorsements. Tom Brady, Bryce Harper, Michael Phelps, and George St. Pierre are all examples of athletes who have accepted a dump truck full of money in order to be seen wearing the product. And it's worked quite well: Under Armour boasts an overwhelming 1000% growth rate in the past five years. They're poised to continue the run in 2015, expanding into sports gear and casual wear, making them a good choice for strong gains from a devoted fanbase.
The Big Movers
What does 2015 have to hold? The crystal ball is a bit foggy, but there are a few good candidates. Traditional big names like Google aren't going to lose market value. A surge in government spending as the recession ends means fat contracts for companies like Lockheed Martin. The continued aging of Americans means good thing for pharmaceuticals like Pfizer. We predict the biggest gain will come from the recovery of the housing market: pick up stock in major companies like Lowe's and Black & Decker that cater to homeowners and potential homeowners and get a cut of the action everytime someone decides to build a deck on their back yard.