NEW YORK (CNN/Money) - Everything got killed -- or so it seemed.
All three major market indexes were down sharply in the first half of 2002. As of June 27, the Dow was off 7.5 percent, the S&P 500 was down 13.7 percent, and the Nasdaq had plunged 25.2 percent.
But those averages mask the fact that there also were a lot of winners. Of the 8,083 stocks in the Zacks Investment Research database, 43 percent were up for the year to date. Many were involved with gold, which enjoyed a huge run as nervous investors fled to its perceived safety. And there was an assortment of small companies that turned in wild gains -- that's always the case, in any market (we list the top 10 in one of two tables below).
There also were several large, high-profile stocks that bucked the trend. Here's a look at some of the most interesting.
Amazon on the right track?
Amazon.com seems to be finally out of the woods: With nearly $750 million in cash and a manageable debt load, the company no longer is plagued with rumors of bankruptcy. And it is once again something of a Wall Street darling, having gained 46.5 percent so far this year.
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More from the first-half round-up
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Sales increased 21 percent in the first quarter and losses were less than expected. Results were helped by continued strength in consumer spending, as well as the company's free shipping program for purchases over $99 -- the plan was so successful that Amazon has since lowered the minimum to $49. The company raised its revenue guidance for the year in April.
That's the good news.
| * As of June 27 | | Source: Zacks Investment Research |
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The company faces what could be an intense price war with rival Buy.com, which announced last week that it would offer books for at least 10 percent less than Amazon. Amazon had cut its prices on books several times this year and that could lower its already razor-thin profit margins. And the company, which is expected to lose money in 2002 before finally posting a legitimate profit (not the pro-forma operating profit that the company likes to tout in its earnings reports) in 2003, is not a cheap stock, trading for more than 120 times 2003 earnings estimates.
The consumer is king
Fortune Brands, another consumer-oriented company, shot up about 40 percent. The company owns brand names ranging from Jim Beam (bourbon) and Titleist (golf equipment) to Master (locks) and Moen (faucets).
Earnings in the first quarter increased 44 percent from the same period a year ago. And earlier this month, the company raised earnings guidance -- analysts now expect a gain of 36 percent in the second quarter and 31 percent for the year.
Fortune Brands has continued to bolster its portfolio of consumer brands through acquisitions. The company bought the Omega Group, a company that makes the Omega, Kitchen Craft and Home Crest brands of kitchen and bath cabinets. And despite the big run in the stock this year, Fortune Brands is still trading at a reasonable multiple of 18 times earnings estimates for 2002.
One more cup of coffee
Indulging in beverages like Fortune Brands' Jim Beam has been one way for investors to forget the market's woes. Another way has been through things like icy cool Mocha Coconut Frappuccinos.
Yes, Starbucks, the creator of the frappuccino, has been a stock on a tear this year, up nearly 29 percent.
| * As of June 27, market value minimum of $250 million and price per share minimum of $5 | | Source: Zacks Investment Research |
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Starbucks was one of the great growth stories of the late 1990s before its stock took a minor stumble last year, dropping 14 percent. But the company has been posting grande-sized growth again, with same-store sales growth (stores open for at least a year) in the most recent quarter of 7 percent (that's good for an established retailer), and an earnings increase of 35 percent. As of May 26, Starbucks' total sales for this fiscal year were $2.1 billion, up 26 percent from the same period a year ago. That's a lot of espressos.
Starbucks raised its forecasts in April and analysts are predicting a 17 percent increase in earnings and 23 percent jump in sales for the fiscal year (which ends in September). However, the stock's valuation seems as frothy as one of the company's lattes, at 38 times estimates for fiscal 2003.
Mergers, gold and small caps
Hearkening back to the merger mania of the 1990s, there was some acquisition activity (albeit limited) that lifted some companies. Shares of British energy company Enterprise Oil were up nearly 60 percent following a takeover by Royal Dutch/Shell. Savings and loan Golden State Bancorp soared 35 percent thanks to a buyout by Citigroup. And Dreyer's Grand Ice Cream got scooped up by Nestle for an 80 percent gain.
The top sector was by far gold and precious metals. Will the run continue? That depends on what happens to the rest of the global economy. The sector is typically seen as a safe haven in times like these, when there are concerns about war as well as a weak dollar.
And small cap stocks, particularly small value, continued to outperform. Forty of the 50 best performing stocks (with a minimum market value of $250 million and minimum price per share of $5) had market values below $1 billion.
The big winner was arts and crafts retailer Jo-Ann Stores, with a nearly 300 percent gain thanks to a 13.5 percent increase in same-store sales in the first quarter and improving profit margins.
The second best performer was Cobalt, a health insurer that is the Blue Cross/Blue Shield licensee in Wisconsin. Cobalt raised earnings guidance for its first quarter and for the full year in April and then wound up surpassing the higher first quarter earnings estimates by 10 percent.
Even some small tech stocks shined. United Online, the company formed from the merger of Internet service providers Juno and NetZero, has been one of the bigger surprises. The company reported a narrower first-quarter loss thanks to cost-cutting and a 10 percent gain in paid subscribers.
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