It's been a solid year so far for US equities with the S&P 500 up 4% putting it at 31st out of 91 in the ranking of global benchmark equity indexes. The best performer in the S&P in 2012 is a little bit of a surprise: typical whipping boy Sears Holding Corporation sits at the top with a 50.5% gain. Here's the top 10:
Let me point out that all ten of these stocks were well into the red in 2011 and some of them (BAC, SHLD, ODP) were the in top 10 worst performers. Here's the line chart in terms of % change from Jan 1, 2011 to Dec 31, 2011:
So if this move in equities at the start of 2012 smells like it might be a bear market relief rally, it might not be just your imagination. It is hard to believe these heavily impaired stocks from 2011 have as a group all of sudden solved their problems.
Even with the 50% recent gain, SHLD is still down over 50% from the 2011 highs. As is evident in the following chart, earnings from the last three quarters have been big disappointments. Sears reports 2011 calendar q4 results on Feb 23rd and the company has typically performed well in that quarter. To this author, a meet or beat in this upcoming announcement would not be indicative of a turnaround and the real test comes in the remaining three non-xmas quarters.
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