S&P 1,800: How These 5 Stocks Made It a Reality
Nov 23rd 2013 11:32AM
Updated Nov 23rd 2013 11:34AM
The S&P 500 climbed above the 1,800 mark for the first time this week, with the index taking just over six months to go from hitting the 1,600 milestone for the first time to its latest achievement. But when you look at the companies primarily responsible for the S&P's gains, you find five names that stand out: Micron Technology , Goodyear Tire & Rubber , Harman International , E*Trade Financial , and Netflix . Let's take a closer look at these five stocks to figure out why they had such a big impact on the S&P's advance.
Micron has been the best performer in the S&P since May, soaring 110% as just about everything has gone right for the semiconductor manufacturer. The company's long-awaited acquisition of Japan's Elpida has made Micron a much larger player in the memory space, boosting its overall production capacity and giving it access to Elpida's lucrative customer list to expand its reach across the industry. In particular, with holiday shopping boosting sales of electronic devices, demand for mobile DRAM chips should increase dramatically, helping Micron boost its sales even further. Even more importantly, a new processor architecture could give Micron a competitive advantage over its rivals, and that marks especially good timing given the rapidly intensifying competition in the space.
Goodyear has risen 76% over the past six months despite having fallen back somewhat in the past month or so. Yet even though Goodyear suffered falling revenue during its third quarter, the tire-maker has nevertheless managed to keep its net income on the rise. By targeting particular high-margin segments, Goodyear is trying to make the most of its sales opportunities. Although substantial debt still poses a threat, Goodyear can quickly move to control that debt as long as it moves swiftly while interest rates are still low enough to make debt maintenance relatively cheap.
Harman International was up 70%, with some of those gains coming on the heels of a 17% jump in sales during its fiscal first quarter. Even though net income fell from year-ago levels, the maker of high-end audio equipment benefited from strong demand in the luxury automobile market. Moreover, Harman has done a good job of keeping up with the times, designing systems that combine navigation, entertainment, and traditional music in a single package for automakers to sell in their high-end vehicles. As long as the economic expansion continues, Harman should be able to keep cashing in on that market going forward.
E*Trade has risen 64%. Despite the sluggishness in ordinary investors getting back into the market, E*Trade has seen its loan portfolio slowly work down, and improving conditions in the housing market bode well for its prospects of getting paid back. Although some analysts are still concerned about E*Trade's loan exposure, low interest rates for the foreseeable future should minimize any rate-related shocks, keeping E*Trade's customers able to repay the company and keep its shares moving in the right direction.
The 63% climb in Netflix shares owes itself to a number of positive factors, but one of the most recent involves its partnership with Disney. Content has become a key component of Netflix's future, and a deal to bring original live-action series involving Marvel characters to Netflix's small screen by 2015 promises a deeper relationship between the two companies. As Netflix has demonstrated its leadership role in streaming video, it has been willing to push forward with smart content deals like this. And as long as it can keep its customers happy with entertaining content, Netflix should continue to see gains.
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The article S&P 1,800: How These 5 Stocks Made It a Reality originally appeared on Fool.com.Fool contributor Dan Caplinger owns shares of Walt Disney. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends Netflix and Walt Disney and owns shares of Netflix and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.
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