The rally's secret leaders

Sure, some famous names have helped lead the charge this year. But so has Pactiv, the maker of Hefty trash bags, and Hercules, a champ in the world of chemicals.

By Alexandra Twin, senior writer

NEW YORK ( -- Thank you, Hercules.

Also, a big thanks to Big Lots (Charts), Pactiv (Charts), Paccar (Charts), OfficeMax (Charts) and Allied Waste (Charts).


You can have Dell (Charts), Yahoo! (Charts) and eBay (Charts). I'll take Allegheny Technologies (Charts) and Nucor (Charts) any day. Well, not any day, but certainly in 2006.

Sure, there are a lot of famous names in the S&P 500 that have led the 2006 stock market rally. As of Monday, GM (Charts) holds the No. 5 spot, Cisco (Charts) is No. 11 and Oracle (Charts) is No. 14.

But there are plenty of companies that don't get much press among the best-performing stocks of the year, including Pactiv, the maker of Hefty trash bags, up 52.3 percent year-to-date. And that's nothing to turn your nose up at - it's better than what 29 out of 30 Dow components have done this year, even with the Dow at an all-time high.

Not interested in garbage bags? How about chemicals? Chemical maker Hercules (Charts) has risen 69.8 percent this year and is the No. 7 biggest S&P 500 stock gainer.

Steel company Nucor has rallied 65.4 percent this year, while the S&P 500's biggest winner is rival Allegheny Technologies, up a whopping 112.3 percent.

That's pretty good considering the broad S&P 500 index is up 12 percent year-to-date.

Meanwhile, a number of widely held stocks have had wince-inducing years. Yahoo! is the sixth biggest loser this year, down 32 percent. Advanced Micro Devices (Charts) is loser No. 9, down 29.0 percent. With a decline of almost 20 percent this year, eBay is loser No. 17. And with the collapse in the housing market, is anyone surprised that four of the bottom 20 biggest losers this year are homebuilders?

So-called healthy food chain Whole Foods Market (Charts) is down 36.1 percent this year, while fast-food retailer Wendy's (Charts) is up 38.2 percent.

And the No. 1 biggest loser: Apollo Group (Charts), down 42.3 percent year-to-date. Why? Errors have been found as part of a probe into how the for-profit education company accounted for stock options. As a result, Apollo's chief financial and chief accounting officers quit and the company said it will have to restate past earnings.

But it's the time of year to give thanks, so rather than focus on the turkeys, so here's a look at some of the surprising standouts to the upside.

The conquerors

Allegheny Tech and Nucor. Allegheny and larger rival Nucor are just two of the steelmakers to benefit from recent strength in the sector, fueled by bets of improving steel prices and earnings in the coming quarters as well as lots of merger talk.

Some of the merger talk has proven to be more than just speculation. On Monday, Oregon Steel (Charts) agreed to a $2.3 billion buyout from a Russian steelmaker. Nucor shares shot up in October on strong earnings and talk that it might be a buyout candidate.

In the third quarter, Allegheny reported sharply higher quarterly sales and earnings that topped estimates, in strength in a variety of its businesses. The company also said it received a $2.5 billion contract from Boeing (Charts) to provide titanium materials.

OfficeMax. As part of its broad turnaround plan, the No. 3 office supply retailer has been revamping stores, cutting costs and trying to boost operating margins. So far, the results have been encouraging, as reflected by the run up in the stock this year.

Office Max has reported improved quarterly results all year that have topped expectations. The company reported a narrower-than-expected loss in its first quarter and then higher-than-expected earnings in its second- and -third quarters, versus losses in all three quarters in the previous year.

In September, Standard & Poor's boosted its outlook on the company to "stable" from "negative," while a variety of analysts have issued cautiously optimistic commentary on the company's outlook.

Big Lots. Like OfficeMax, the stock of closeout retailer Big Lots has surged this year as the company has attempted to ship up.

Big Lots closed more than 170 underperforming stores in 2005, and began to see the benefits of that in 2006. The company got rid of excess inventory this year by marking down slow to sell products, and also put through a $150 million stock buyback program. Big Lots also posted improved earnings this year.

Most recently, Big Lots posted a third-quarter profit, versus a loss in the same quarter a year earlier. Analysts were expecting a loss, according to Thomson Financial estimates. The company also boosted its fourth quarter and full year earnings and sales guidance.

Hercules. The stock of larger rival Dow Chemical is down for the year, while competitors DuPont and Eastman Chemical have posted gains in the teens. But it's the stock of Hercules that has made the biggest gains of the chemical makers.

It's been a mixed year for the sector. On one hand, the companies have been helped by lower prices for crude oil and natural gas - the main raw ingredients for many of their products. However, weakening demand amid the slowing global economy has been a looming threat.

Since bottoming in October 2005, Hercules stock has been on a tear. The company swung to a loss in its second quarter, due to a lawsuit, but recently reported improved third-quarter earnings and issued a bullish 2007 outlook.

Big mergers, big risks

Rally rolls on, but beware 2007

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