Any stock-focused article about the past year has to begin with the most obvious fact: 2017 was an incredible year for stocks.
Cryptocurrencies—with their astronomical returns—may have stolen the S&P's thunder (Bitcoin finished the year up 1290%, Ethereum ended 2017 +8900%, and Ripple rang out the old year higher by an eye-popping 32,000%), but those massive returns were accompanied by incredibly high risks and head-snapping volatility. Stocks were much less volatile: indeed, this past year the VIX spent most of the year ranging between 10 and 11; as well, the volatility index saw its lowest close ever on November 3, at 9.14. As well, equities were far more stable as an investment proposition. The way we see it, right now stocks can actually be considered an investment, whereas cryptocurrencies are, for the most part, still high stakes speculation.
US stock indices returned 19.4%, 25.08%, and 28.24% for the S&P, Dow, and NASDAQ respectively. Ironic really since at the beginning of 2017 many were concerned that the market's Bull Run had come to an end. Clearly, that wasn't the case.
So which stocks saw the biggest gains in 2017? The 5 mentioned below had a significant hand in pushing the indices higher. We've listed the outperformers in reverse order and noted the prices at which they started 2017 as well as where they finished the year.
Tomorrow, we'll look at the 5 worst stocks of 2017. We'll end the week with the third part of this series, 5 stocks to follow in 2018.
5. Boeing: Opened 2017 at $156.30; closed 2017 at $294.90 +89.4%
Aerospace and defense products manufacturer Boeing (NYSE:BA) had a stellar 2017. While share price gains of over 89% was only good enough for fifth place on our list, the company did finish the year in first place on the Dow, the best performing stock among the 30 listed on the index and a full 20% ahead of Caterpillar (NYSE:CAT), the past year's second best Dow performer.
Boeing's rally was a combination of rising free cash flow ($4.38B for Q2 2017, the most for a single quarter in over 10 years), optimism regarding tax cuts, and more willingness from the US government to ramp up defense spending following various threats from North Korea over the course of 2017. Boeing's revenue is on the decline, but the company is being managed more efficiently, resulting in a strong bottom line and better cash flow. Following the good year Boeing has had, the company raised its dividend 20% in December, to $1.71 quarterly or $6.84 annually, which amounts to a future yield of 2.3%.
4. Wynn Resorts: Opened 2017 at $87.2; closed 2017 at $168.5 +94.8%
What a three year roller coaster it's been for Wynn Resorts (NASDAQ:WYNN). The hotel and casino chain lost 53% in value during 2015 after Chinese authorities cracked down on gaming activity in Macau, scaring gamblers and investors alike. In 2016, the stock gained 30%, and we named it one of our comeback stocks of 2016. In 2017, the company took at least five more steps forward.
Over the past couple of years appetite for gambling recovered, in spite of the Chinese government. Revenue for the first three quarters of the year is $4.6 billion, up 42% from last year's 3.16 for the comparable quarters. In Q3 2016, the company had a negative Net Income of $17 Million. The company rebounded handsomely in its last earnings report, Q3 2017, with a Net Income just shy of 80 Million. This incredible turnaround and shift of sentiment regarding casinos brought Wynn back from the dead and earned it the number four place on the best performing stocks of 2017.
3. Vertex Pharmaceuticals: Opened 2017 at $74.4; closed 2017 at $149.8 +103.4%
2017 was the year where heavy research and development paid off for Vertex (NASDAQ:VRTX); the company spent just over a billion dollars in R&D over the first three quarters of the year. Its revenue is up almost 50%, from $1.24 Billion to $1.83 Billion, following the success of its Cystic Fibrosis treatment which includes Kalydeco and combination treatment Orkambi.
The company has been experimenting with state-of-the-art gene editing technology, called CRISPR, which is touted as the next big thing in gene therapy. The technology allows researchers to modify DNA sequences and gene function. This potential revolutionary technology added to the excitement surrounding Vertex and sent the stock soaring during the course of 2017.
2. Align Technology: Opened 2017 at $96.4; closed 2017 at $222.1 +131.13%
Orthodontics has always been a lucrative market, even within the world of dental care. For that reason, new teeth straightening technology is bound to make some waves in investors circles.
Align Technology (NASDAQ:ALGN) is trying to make metal braces a thing of the past. Generations of Americans know how painful, uncomfortable and awkward it can be to wear braces. Align's Invisalign are clear braces that make the process of teeth straightening friendlier, less painful and more aesthetic. Investors have high hopes for mainstream adoption of the new braces and 2017's price surge reflects the optimism surrounding Align.
1. NRG Energy: Opened 2017 at $12.3; closed 2017 at $28.4 +132.3%
An energy company at the top of the S&P 500 best performers list? For the year 2017? You better believe it.
However, it's not your regular growth story success. NRG Energy (NYSE:NRG) owns a diverse power generation portfolio, which includes traditional and renewable sources. However, diversifying and entering new markets has not been beneficial for business.
Most of this year's gains for NRG shares came after the company announced it was undertaking a restructuring effort in order to create a leaner, more efficient company. NRG plans to shed $13 billion in debt and raise revenue by $4 billion via selling assets, both conventional and renewables.
Wall Street is infamous for enthusiastically embracing extensive restructuring and cost cutting; the serious uptick in NRG shares is an extreme example of that 'love.' The company has been performing poorly lately, with revenue dropping year-over-year in two of the past three quarters, and a loss on the year that exceeds $615 million. Obviously, Wall Street now expects much better days ahead.