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All Contents © 2019The Kiplinger Washington Editors
By James Brumley, Contributing Writer
| March 7, 2019
This bull market, after breaking longevity records in August of last year, is about to celebrate its 10th birthday. The current run, which started from the market low on March 9, 2009, has lifted the Standard & Poor’s 500-stock index by more than 300%. That includes escaping what looked to be a brewing bear market during the final quarter of 2018.
Not all stocks have performed equally over the course of the past decade, of course. Indeed, the disparity between the market’s top performers and its bottom dwellers is shockingly wide. Some companies saw their shares crumble by more than 90%, while other stocks exploded by several thousand percent.
Granted, those ultra-big winners are outliers, but more stocks have dished out quadruple-digit gains since early 2009 than you might think.
Here are the stock market’s 10 biggest winners for the past 10 years, and its 10 biggest losers. We’ve evaluated the entire Russell 1000 Index, which consists of 1,000 of the largest companies on U.S. exchanges. In all cases, remember that past performance is no guarantee of future results; some losers are in recovery mode, while some winners are unwinding their big moves.
Data is as of March 6. Returns data provided by S&P Capital IQ.
Market value: $2.2 billion
10-year change: -38.3%
Most investors won’t be surprised to learn the biggest loser among the major names for the past decade is an energy company. The whole sector hit a wall in late 2014, and many of these organizations were simply damaged beyond repair.
Whiting Petroleum (WLL, $24.44) was no exception, logging a nearly 40% loss for the past 10 years thanks to the 90% tumble the stock has suffered since peaking in August 2014. It’s still within sight of multiyear lows.
Like so many of its peers, aggressive capital expenditures and the subsequent debt proved to be the company’s undoing. Although relatively new CEO Brad Holly has a clear plan to curb expenses and pare back its debt from $2.8 billion to $2.0 billion, it’s slow going. The company’s production has been subpar, and Whiting Petroleum is going to be forced to make capital expenditures for new infrastructure this year on top of laying out at least $800 million to bring 146 new wells online. It’s a step in the wrong direction, in investors’ eyes.
Market value: $9.7 billion
10-year change: -48.3%
“One word explains the selloff in PCG: wildfires. The first one occurred in October 2017, and the other last November.” That’s what David Russell, vice president of content strategy at online brokerage platform TradeStation, says of the 48%-plus loss that West Coast utility company PG&E (PCG, $18.36) has logged over the past decade.
He’s right, but he understates the intensity of the devastation.
As of September 2017, shares of the utility company implicated in last year’s worst wildfires in California had roughly doubled from their mid-2009 low. The stock has lost 74% its value from that peak, with the bulk of that pullback stemming from now-validated worries that PG&E would be viewed as legally liable for the role its unkempt power lines may have played in the matter. The potential liabilities are estimated at more than $30 billion, so the company filed for bankruptcy in January of this year, knowing it has little chance of actually affording its share of the restitution.
PG&E might not be the last utility stock that punishes investors in this way, however. Russell adds, “These disasters have introduced volatility and risk into a sector valued for its stability and predictability.” That stability may be easily upset going forward if disaster-related liabilities and subsequent bankruptcies become the new norm.
Market value: $12.5 billion
10-year change: -50.9%
At times, telecommunications company CenturyLink (CTL, $11.56) looked like it was going to be able to survive in an environment that is dominated by names such as Verizon (VZ) and AT&T (T), and that has been disrupted by a variety of self-service options and forever changed by the growing preference for wireless.
It’s all just proving to be a little overwhelming for CenturyLink, however. Without the help of acquisitions – namely, the Level 3 Communications deal made in 2016 – CenturyLink hasn’t seen any real revenue growth since 2012.
Things could worsen for shareholders before they get better, too, according to Bank of America Merrill Lynch analyst David Barden. He cautioned investors just a couple of weeks ago that “negative sentiment overhanging the stock will hinder re-rating until the company can show revenue growth progress,” adding that CenturyLink’s first-quarter results may well fall short of expectations.
The market will have to wait on those numbers. The struggling telecom outfit was forced to delay the submission of its full-year report after identifying “material weakness” in the way that recently acquired Level 3 records its revenue.
Even if those issues are resolved, concerns about the credibility of any of its numbers are the last thing CenturyLink needs at this time.
Market value: $5.4 billion
10-year change: -52.6%
Solar power panel companies such as First Solar (FSLR, $51.37) found themselves overextended in 2008 when demand – and then prices – for photovoltaic panels reached unsustainable levels. The soaring price of oil in 2007 and 2008 helped whipped up a solar-power mania that was never going to last.
Rising gas and oil prices weren’t the only factor that led to a flameout of solar mania, however. Corresponding scientific breakthroughs that helped make solar power in the first place drove up the glut of panels that shook up the industry. The 2008 peak also was around the time solar-panel costs started to reach price-parity with “the grid,” meaning the alternative form of energy cost roughly the same to create as more conventional sources of electricity. The panel-pricing boom didn’t jibe with the cost of making them, leading to a multiyear price war nobody really seemed to win.
Then, just when it looked like supply and demand (along with panel prices) were ready to stabilize in 2012, U.S. subsidies for solar panel purchases withered to roughly half their typical levels.
As Banyan Hill Senior Investment Analyst Chad Shoop put it, “First Solar struggled as solar was ahead of its time.” In fact, it is perhaps a miracle that FSLR shares didn’t lose more ground than they did as they plowed into that perfect storm.
Shoop sees hope in the horizon, however. He adds that First Solar “is finally turning a corner and the technology is becoming feasible without rebates and other incentives.”
Market value: $2.1 billion
10-year change: -56.6%
CNX Resources (CNX, $10.79) is down more than 56% over the past decade, but there is a huge footnote to add to the company’s poor performance. Prior to late 2017, this oil-and-gas name also was a coal company. It spun off that business into an organization called Consol Energy (CEIX), using the name formerly utilized by its parent.
In retrospect, the timing of the spinoff couldn’t have been less lucky. After years of weak and falling prices largely fueled by social and political distaste, the future of coal looked grim. Coal-friendly President Donald Trump has largely willed prices higher, however, sending them up around 75% since his election. Consol Energy is firmly profitable again.
CNX Resources – the gas company that remained after the spinoff of its coal unit – is profitable too, though not quite as impressively. It also still has the same debt headaches many of its peers have. Although it’s swapping out old debt for new at more advantageous interest rates, bond rating agencies aren’t all that impressed. Moody’s rated CNX’s latest issue of $500 million in debt at B3, which is below what is considered “investment-grade.” It’s also the same rating as the debt CNX is replacing, though the company says it’s making forward progress in trying to lower its interest payments.
Market value: $1.2 billion
10-year change: -61.2%
Nabors Industries (NBR, $3.40) has suffered a 60%-plus setback since early March 2009. Yes, the 2014-15 plunge in crude-oil prices didn’t help, but it had far more problems throughout the past decade … and long before.
Nabors Industries operates one of the world’s largest land-based contract drilling services, though it has a respectable offshore rig presence as well.
Contract drilling is theoretically one of the safer, more reliable industries within the energy sector. Although the price of oil and gas can obviously lead to modest changes in demand for such services, drillers and rig operators are paid by the day, in essence. Meanwhile, global consumption of oil, for the most part, steadily increases regardless of price. It’s the explorers and refiners that bear the bulk of the financial risk in the business.
Yet, Nabors hasn’t turned a full-year operating profit since 2014 and was only convincingly profitable before 2008 when crude-oil and natural-gas prices were well into record-breaking territory that were entirely unsustainable.
Market value: $2.7 billion
10-year change: -70.5%
Range Resources (RRC, $10.60) is among several energy stocks that were in the wrong business at the wrong time, and nearly ruined as a result.
Range Resources actually pulled out of the Great Recession quite nicely. The natural-gas company’s shares rallied from their 2008 low near $27 to a high near $94 in 2014, as the organization plugged into the heart of the fracking revolution. Despite weaker per-unit pricing, Range Resources still was able to grow its top line on sheer production growth.
The year 2014, however, was as much of a secular tipping point as it was a cyclical tipping point. Gas prices continued to fall to what would be multi-decade lows by early 2016, and while they’ve improved some since then, they remain at the (very) low end of a multiyear price range. RRC shares have fallen nearly 90% since their mid-2014 high.
There is at least one bright spot, however. Poor pricing power or not, Range Resources continues to grow its proved reserves of low-cost natural gas, adding 3.1 trillion cubic feet equivalent (CFE) of the stuff in 2018 to bring its total to 18.1 trillion. Even at tepid prices, the market value of that gas exceeds the company’s current market capitalization. Natural-gas values still need to improve at least a little, however, before investors can earnestly believe the company has a viable future.
Market value: $4.9 billion
10-year change: -78.8%
Chesapeake Energy (CHK, $2.98) is yet another energy name that has left behind a forgettable decade, logging a roughly 80% loss since the broad market made a bullish pivot in the early part of 2009. Like many of its peers on this list, the crux of its loss was booked thanks to the 2014-15 drubbing of oil and gas prices. The company has never been able to get fully back on its feet, though not from lack of trying.
It’s a familiar story. Like many of its peers, Chesapeake was far too aggressive in its effort to build capacity when oil and natural gas prices – gas in particular – were soaring. Once those unsustainable prices were unwound, the company found itself unable to service all of its debt while paying its other bills.
But part of the backstory is unique to Chesapeake Energy.
The name Aubrey McClendon should ring a bell. He helped found the company in the 1980s, then brought a constant stream of drama to the table. In 2005, Forbes deemed him one of the nation’s top CEOs, and by 2011 the very same magazine labeled him “America’s most reckless billionaire,” referring to his personal and professional life. The assessment was at least a partial nod back to 2008, when he was forced to sell a huge piece of his stake in Chesapeake to, of all things, satisfy a margin call. He ultimately was ousted in 2013 after a few too many scandals made him too much of a liability.
The company finally is seeing daybreak, with Q4 2018’s profits rising 57% year-over-year. Still, much work must be done to undo the damage McClendon inflicted.
Market value: $5.1 billion
10-year change: -83.2%
Energy outfit Transocean (RIG, $8.37) actually booked the bulk of its 10-year, 83% rout outside of the 2014-15 meltdown of the energy market. It peaked in early 2008 and would never rekindle its former glory. While other players have regrouped since crude’s 2016 bottom, RIG shares are (once again) toying with multiyear lows.
Transocean is the world’s largest offshore drilling contractor. It was at one point a prime business to be in. But the advent of fracking, the subsequent deterioration of oil prices, rising costs of deepwater drilling and 2010’s Deepwater Horizon rig explosion – a rig owned and operated by Transocean – have all collectively created a massive headwind for the highly focused outfit. The company has struggled to turn a consistent profit for years.
Transocean remains optimistic, suggesting in late February that the daily rental rates commanded by ultra-deepwater drilling rigs could double over the next couple of years. That would put day rates in the $400,000 area, if not more, likely restoring consistent profits for Transocean in the process.
That may well be the shape of things to come. If day rates for offshore rigs are going to double in the foreseeable future though, crude prices need to improve substantially. The EIA is modeling West Texas Intermediate crude at an average price of $58 per barrel for 2020, up less than $2 per barrel from WTI oil’s present market price.
Market value: $671.8 million
10-year change: -93.7%
The nearly 94% loss that Weatherford International (WFT, $0.67) has logged since this time of year in 2009 was mostly realized well before and well after 2014’s oil implosion. The Houston-based outfit hasn’t turned a full-year profit since 2011, and it hasn’t turned a quarterly profit since Q3 2014. Last quarter’s net loss, which also fell short of estimates, suggests there’s still no end in sight for the misery.
Weatherford, in retrospect, has become a case study in the downside of making decisions by looking at the past rather than looking at the present or the future. Like all of its peers and rivals, the company borrowed heavily to ramp up production when oil and gas prices were firm through 2014. But, even when oil and gas prices fell through 2015 and other oil players were acting defensively, Weatherford was taking on more debt to make more ill-advised purchases.
The great irony is, Weatherford finally began to think defensively and sell assets to pay down debt beginning in the latter half of 2017, when recovering oil prices merited the asset acquisitions its rivals started to make in earnest.
Market value: $12.9 billion
10-year change: 4,044.8%
It’s not exactly a household name, but most diabetics will recognize DexCom (DXCM, $143.41) as one of the key brand names within the glucose monitor market.
DexCom was the beneficiary of a major breakthrough and some savvy dealmaking at the ideal time. In 2011 it partnered with Roche Holdings (RHHBY), which agreed to sell the DexCom Seven Plus to physicians it was already talking to. Early the next year it acquired SweetSpot, adding an online data-processing tool to its mix. In the latter part of 2012, the FDA approved the DexCom G4 Platinum, which was one of the earliest glucose monitors that integrated a sensor, a transmitter and a monitor that included small, full-color screen.
The rest is history. The confluence of contributing factors led DexCom to incredible revenue expansion, and subsequent growth in its stock price. The total top line of $1.03 billion for the past four reported quarters is more than 10 times 2012’s figure. And in fact, DXCM had no revenue to speak of 10 years ago.
It’s one of those rare stories where an idea actually lives up to the promise, even if it took a while to get there.
Market value: $10.2 billion
10-year change: 4,126.1%
It may well be the biggest gain that investors were least expecting since the market hit bottom. United Rentals (URI, $128.05) is a fine company, but renting tools and construction equipment only presents a relatively limited degree of growth opportunity … right?
If nothing else, 2008’s subprime-mortgage-driven implosion was a not-so-gentle reminder that economic booms are never permanent, and recessions can take shape in an instant with very little warning. Wary of that reality, construction and repair companies increasingly began to rent tools as needed rather than commit to major purchases that might not pay for themselves for the foreseeable future. The new paradigm drove United Rentals to record-breaking revenues and net income last quarter.
Granted, URI had help. Acquisitions such as the recently completed purchase of WesternOne have given the company profitable scale while removing competitors from the highly fragmented industry’s landscape.
It’s been healthy dealmaking, too. Incoming CEO Matthew Flannery recently told CNBC, “By the end of 2019, even with all the acquisitions we’ve done, our leverage will be back down to the bottom of our range at 2.5%.”
Market value: $47.0 billion
10-year change: 4,171.8%
The 4,000%-plus gain that casino giant Las Vegas Sands (LVS, $60.66) has dished out to shareholders since early March 2009 is impressive, to be sure, but we must include a footnote. That is, while the 2008 recession hit all stocks hard, it hit LVS especially hard, driving it to a (mostly unmerited) multiyear low of around $1 per share in March of that year.
Still, to any investor who had the guts and foresight to realize that Las Vegas Sands wasn’t doomed at the time, it was a well-deserved win. It just as easily could have gone the other way, and in fact, it almost did.
Like most other businesses did when the real estate market was booming into 2007, Las Vegas Sands was overly aggressive. But around the same time, Macau – China’s gambling enclave – was finally opening up to American casino operators. LVS had developed a presence there beginning in 2004, but its second Macau property developed in 2007 that drove the company’s debt to an unmanageable $10 billion couldn’t have been more unfortunately timed.
With some financial help from CEO Sheldon Adelson and a little luck, however, Las Vegas Sands navigated its way through a fiscal minefield and restored itself to its pre-subprime meltdown glory.
10-year change: 4,238.6%
The one thing even more amazing than the fact that a pizza chain’s stock is capable of advancing more than 4,000% in a decade is that the company in question was neither a new company or a new stock. Domino’s Pizza (DPZ, $248.60) was founded in 1960, and went public in 2004.
For a couple of mostly unexpected reasons, however, it sprinted out of the 2007-09 recession.
One of those reasons was a long look in the mirror. In 2009 – after years of lackluster results that clearly didn’t turn around in the throes of the subprime meltdown – Domino’s Pizza turned a public acknowledgment of its subpar product into a full-blown campaign. Consumers responded well.
The other bullish prompt? TradeStation’s David Russell explains that Domino’s “managed to stay ahead of the curve on innovative delivery and online ordering.” Digital orders now account for about half of the company’s total business, confirming the company has successfully embraced the lifestyles being lived by its target market.
The kicker: Domino’s also has become very, very good at advertising, understanding what turns a bystander into a customer. Delving into its data trove, the company recognizes that most consumers want delivery while they’re watching television, and it has gotten massive traction just from a small fleet of custom-built ‘DXP’ pizza delivery vehicles that themselves created a brand-building buzz.
Market value: $14.3 billion
10-year change: 6,108.0%
Abiomed (ABMD, $317.85) has been around since 1981, and it has been a publicly traded company since 1987. But while it has made a huge difference for cardiac patients since bringing the first artificial heart to the market, it didn’t become a wildly rewarding investment until 2015.
But oh, what a reward. ABMD has rocketed ahead by more than 6,000% over the past decade, with the advance really starting to take shape in 2015, and the rally hitting overdrive since 2017.
The beginning of that big runup was driven by widening FDA-approved uses of its Impella heart pump. The advance went into an even higher gear in 2017 when Impella’s sales growth reached a critical mass. After Impella had been on the market for more than two years, the medical community was more than convinced the device could deliver exactly as promised. The fiscal year ended March 31, 2018, saw a 33% jump in revenues power a 74% explosion in operating income.
That said, party might be winding down. In February, it was reported that the FDA had taken notice of the fact that mortality rates for patients with the Impella RP heart pump were higher than previously observed. Although it’s likely those patients would have died anyway, the data still taints the device’s growth prospects.
Market value: $157.0 billion
10-year change: 6,438.4%
It’s no surprise that Netflix (NFLX, $359.61) has earned a spot on a list of the market’s top performers for the past 10 years. The company has not only ushered in the era of streaming video – it largely defined it.
That wasn’t necessarily the future that investors or consumers saw for Netflix as of the beginning of 2009. Yes, it had already offered streaming digital for a couple of years by that point, but it still was predominantly a mail-based DVD rental house that continued to compete with a weakened but lingering Blockbuster and its peers. The market was curious, but it didn’t see Netflix’s new project as a major threat to the well-entrenched cable television providers.
Talk about being wrong.
Today, Netflix is the streaming name to beat, boasting 146.5 million subscribers and flaunting itself as a provider to a majority of U.S. video viewers that subscribe to some sort of streaming platform. As of the middle of last year, 51% of the U.S. streaming market was paying Netflix customers, while the next nearest rival was Amazon Prime at a 33% share. Although many U.S. cord cutters now subscribe to two or more streaming video platforms, most of them are choosing Netflix as at least one of their services.
Also interesting? Netflix was one of the best stocks of the 2007-09 bear market, too.
Market value: $19.7 billion
10-year change: 6,541.0%
Who would have thought 10 years ago we were on the cusp of a fitness evolution? The bullish undertow certainly helped the usual suspects such as Nike (NKE) and even gave birth to companies like Fitbit (FIT). But Lululemon Athletica (LULU, $149.09) was arguably the biggest beneficiary of the paradigm shift. Its shares are up an incredible 6,541% for the past decade.
That run wasn’t without its drama and gaffes, of course.
In 2013, the company was forced to recall some of its black yoga pants because they were partially transparent while worn. Exacerbating the episode was how then-CEO Chip Wilson, who later that year indirectly and inadvertently blamed the shape of some women’s bodies for the embarrassment they may have faced.
Wilson stepped down shortly thereafter, temporary replaced by Christine Day and then (seemingly) permanently replaced by Laurent Potdevin in early 2014. But, following the revelation of an inappropriate relationship with an employee, Potdevin was replaced by Calvin McDonald in August 2018.
Despite the revolving CEO door – none of which have so far been able to revamp the company’s corporate culture – Lululemon continues to break revenue records thanks to sustained double-digit growth rates. It’s a testament to the sheer strength of the brand name.
Market value: $18.5 billion
10-year change: 7,184.6%
A cosmetics and haircare retailer’s stock actually gained more than 7,000% between March 2009 and March 2019? Believe it, but know there’s an asterisk.
Ulta Beauty (ULTA, $312.51) was founded in 1990 and remained a relatively small operation for a couple of decades. Even when it went public in late 2007, familiarity with the brand was minimal, as was faith in the stock’s foreseeable future. Exacerbating the usual post-IPO lethargy Ulta faced in 2008 was a subprime mortgage meltdown that devastated the economy and tightened consumers’ purse strings. By early 2009, ULTA shares were 70% below their initial public offering price.
Investors should have had more faith in the concept, and its founders, and its management.
Terry Hanson and Richard George both served as presidents of Osco Drugs, the former following the latter, where they mastered the craft of retailing – including selling cosmetics – before establishing Ulta in 1990. Mary Dillon, a former PepsiCo (PEP) executive and McDonald’s (MCD) chief marketing officer, was named Ulta’s CEO in 2013, bringing with her a wealth of experience gleaned from two consumer-minded giants. And, the company hit the accelerator at a time when a fragmented and ineffectively served beauty supply market was ripe for the scale Ulta provided.
The proof is in the company’s growth. Between early 2009 and now, Ulta’s store count has ramped up from 305 to 1174.
Courtesy Exact Sciences
Market value: $10.8 billion
10-year change: 10,870.5%
A decade ago, Exact Sciences (EXAS, $85.57) was in serious trouble.
While the market storm at the time certainly was a contributing factor, shares of the then-established biopharma outfit had fallen from a 2003 peak near $18 to the sub-$1.00 level by late 2008. Short on cash and with no revenue to speak of (nor none on the near-term horizon), it was toying with the idea of selling itself outright, or selling its prenatal and reproductive health assets to Genzyme.
It chose to sell some of its intellectual property to Genzyme, pocketing a much-needed $24.5 million in the process that would be used to continue the development of a colorectal cancer test.
That decision has made a world of difference for the few investors willing to stick with, or buy into, Exact Sciences when it was on the brink of collapse. The work funded by Genzyme’s purchase ultimately went on to become the popular Cologuard colon cancer screener, which has simplified the process to the point that individuals can perform the test themselves in the comfort of their own home.
Since then, the company has begun work on other types of cancer diagnostics tools, building on the science and success of Cologuard. It was the all-or-nothing gamble on its colon cancer screener, however, that saved the company and rewarded investors so handsomely.
Market value: $7.7 billion
10-year change: 23,296.6%
Finally, the biggest gain for the past ten years is a stunning 23,000%-plus, courtesy of biopharma outfit Jazz Pharmaceuticals (JAZZ, $135.70).
It’s the sort of story biotech traders tend to hope for, but rarely see pan out.
A decade ago, Jazz Pharmaceuticals was a company with more ideas for drugs than actual, approved products. Its antidepressant Luvox was struggling, and though its relatively new narcolepsy drug Xyrem was gaining traction, it needed much more scale. Though its JZP-6, or sodium oxybate, was showing solid promise as a treatment for fibromyalgia in late-stage trials underway at the time, the company’s mere survival was anything but certain. It needed to start making some real money, and fast.
A lack of earnings, in fact, forced the company to cull 24% of its workforce through three rounds of layoffs in 2008.
Much has changed in the meantime – clearly – but all for the better. Luvox has essentially gone away, Xyrem has grown into the company’s flagship drug and cancer treatment Defitelio (defibrotide sodium) is picking up speed. Defitelio wasn’t part of the portfolio until Jazz Pharmaceuticals bought the rights to market it in North and South America in 2014.
One recurring criticism of Jazz is that it has bought more of its portfolio and pipeline than it has development. But given the cost and risk of new drug development against the stock’s jaw-dropping return, it’s difficult to care how the company approaches the pharmaceutical business.
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