Since bottoming out in its a financial-crisis low in March 2009, the U.S. stock market has performed exceptionally well: Eight-and-a-half years later, the S&P 500 is up by 263%. Naturally, there are many stocks that have far outperformed the average during that period, including some popular names. Let's take a look at 15 companies whose shares have risen by 500% or more during the current bull market, and consider whether any of them might have significantly more room to the upside.
Certain industries have performed very well
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Notice that some sectors are particularly well represented on the chart. Tech is an obvious example, which shouldn't come as too much of a surprise, given the level of innovation generated by companies like Apple and Amazon.com in the current decade.
Financial stocks are also well represented, with all three major payment-processing companies and the nation's second-largest bank making the list. The financial sector was the hardest hit by the crisis, but many companies in it have done a great job of rebounding.
Consumer discretionary stocks were also hard-hit by the Great Recession. In tough times, people still need to spend on things like gasoline and groceries. However, it's easy to cut things like gambling (Wynn and Las Vegas Sands) or higher-end apparel (Under Armour) out of the household budget.
The power of dividends
Another important concept that's nicely illustrated by the chart is the compounding power of dividends. Wynn Resorts is one extreme example, as reinvested dividends added more than 450 percentage points to investors' returns since March 2009. American Express is another example – not only did the stock rise by more than 700% over eight-and-a-half years, but thanks to the magic of consistent, reinvested dividends, the stock's total return beat the two stocks ranked immediately above it on the list, both of which pay smaller dividends.
Are any of these stocks still worth buying?
Despite the incredible runs these stocks have already delivered, there's a solid case to be made for many of them as long-term investments.
For example, one of my personal stock holdings is Bank of America, which has come quite a long way since the financial crisis. Its capital levels are well in excess of regulatory requirements, asset quality has improved tremendously, and the bank's profitability is getting close to where it needs to be. In addition, if the Federal Reserve continues to raise interest rates as expected, and President Trump rolls back banking regulations as he has promised to do, there could certainly be much more upside for the bank's shares.
Under Armour is another stock that still looks cheap. In fact, at one point not so long ago, its stock would have been close to the top of this list, but it has fallen by about 65% over the past two years due to slowing growth and a few sub-par earnings reports. However, there are still several opportunities for the company to grow, including expanding its "athleisure" or sports lifestyle product lines, and increasing its international presence.
How much longer can this bull market continue?
On one hand, the current bull market has been going strong for more than eight years, and is now one of the longest in history. In fact, at about 102 months old, it's less than a year shy of becoming the longest bull market since World War 2.
On the other hand, there are good reasons to believe there's more room to run in the coming years, especially if tax reform gets passed, wage growth occurs, and business regulations get loosened.
In a nutshell, the gains in the chart could get even bigger. Whether they will or not remains to be seen.
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*Stock Advisor returns as of August 1, 2017The author(s) may have a position in any stocks mentioned.
Matthew Frankel owns shares of American Express, Apple, and Bank of America. The Motley Fool owns shares of and recommends Amazon, Apple, Baidu, Cummins, Mastercard, Netflix, Starbucks, Under Armour (A Shares), Under Armour (C Shares), and Visa. The Motley Fool recommends American Express. The Motley Fool has a disclosure policy.