The S&P 500 Index (SPX) is up about 13% on the year, and a surprising number of stocks have already doubled in value. Investors tend to get drawn to these high-flying stocks, which made me curious whether these stocks tend to keep going higher for the rest of the year or if they tend to give back some of their gains. In the article below, I dig into the historical data to determine if we can buy in now, or if it’s too late.
Stocks that Doubled vs. the Others
For this study, I went back 10 years using the list of current S&P 500 stocks and found the stock’s year-to-date return around this time of year (mid-August). The stocks had to be priced above $8 and have at least ten analyst ranks at the time to be considered. I separated the stocks by those that were up 100% or more year-to-date and those that were not. The table below summarizes the rest of year returns.
Based on this analysis, it’s fine to chase these high-flying stocks. The 23 stocks that already doubled in value by August 11 returned an average of about 20% for the rest of the year, compared to just 5.2% for other S&P 500 stocks.
Both groups were positive about 60% of the time. The reason for the outperformance is that even though the stocks were up significantly at this point in the year, they still had a lot of upside to go. The stocks that doubled and were positive for the rest of the year averaged a gain of about 41%, compared with 16% for other stocks.
Surprisingly, when things went wrong, the high-flying stocks did not crash any harder than other stocks. The average loss was about 11% for both groups. Perhaps most impressive, stocks that had doubled beat the SPX for the remainder of the year 65% of the time, versus 47% for other stocks.
IOTW Chart 1
Breaking Down 100% Winners
I took the 23 stocks that had already doubled on the year and broke them down by how much love they were getting from analysts. I used our buy/sell/hold ratings from Zacks for this analysis. It’s not a lot of data points per group, so the…
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