NEW YORK -- Investors who bought housing stocks nailed it in 2012.
Signsof a housing recovery that may finally stick catapulted home builderPulteGroup to the top of the performance charts. Pulte shares nearlytripled, rising 188%, ranking it No. 1 out of the 500 large-companystocks that make up the Standard and Poor's 500-stock index.
Pulte,which sells homes under the brands Pulte Homes, Del Webb and Centex,and also has a financial arm that issues home loans to buyers, hasbenefited from data point after data point that points to a real estatemarket on the rise.
Homesales, housing starts and prices all improved in 2012, just as thenumber of foreclosures fell. In November, housing starts hit 861,000,the second-highest level since July 2007. Pending home sales rose to alevel not seen since 2009-2010, when the government was offeringincentives to first-time home buyers. The more solid foundation in thehousing market has also done wonders to rebuild shares of Lennar, thenation's largest home builder. Lennar, which ranked sixth best in 2012returns, soared nearly 97%.
Other big winners in 2012 includefour more stocks that doubled. Sprint Nextel, the nation's third-largestwireless carrier, rallied 142%. The telecommunications companybenefited from the massive shift to smartphones and other hand-heldcommunications devices. Sprint Nextel is the last of the major wirelessplayers to offer unlimited data plans, which is boosting its smartphonesign-up subscriptions.
Whirlpool, which makes durable, big-ticketitems such as refrigerators, freezers and dishwashers, gained 114%. Themaker of consumer discretionary products benefited from an improvingjobs market, the housing rebound and income gains for consumers.Similarly, online travel service provider Expedia also got a boost fromthe rebounding economy, as well as travelers' willingness to spend moneyon non-discretionary things such as family vacations. Its shares rose112%.
Bank of America rose 109%. The bank's big move partlyreflects a rebound from a steep 58% drop in 2011. It also profited fromthe improving housing market, which has boosted consumer confidence andreduced the number of underperforming and underwater mortgages. Thefinancial sector was the best-performing of the 10 sectors in theS&P 500, gaining nearly 25%.
Investor optimism rose in March2012 when Bank of America passed a bank stress test issued byregulators. That raised hopes that the "too-big-too-fail" bank, whichnow sports a measly 0.4% dividend yield, will get the OK from thegovernment in 2013 to boost its dividend and buy back shares of itsstock, both of which are investor-friendly.
But for every big winner on Wall Street there was a big loser.
ApolloGroup topped the loser list in the S&P 500. The for-profiteducation provider fell 61%. The government has targeted Apollo andother for-profit educational institutions because of the high debtlevels of graduates and a relatively poor employment track record forfor students.
Computer chip maker Advanced Micro Devices tumbled56% amid a tough environment for traditional PCs in a tech worldshifting rapidly to smartphones and tablets. Shares of electronicsretailer Best Buy plunged 49% as it struggled to compete with onlinesales and shoppers' increasing use of the Internet to comparison shopfor the best deals. Another victim of the rapid shift toward hand-helddevices and tablets was computer market Hewlett-Packard, whose sharesfell 45%. J.C. Penney, the department store retailer, also sufferedsteep declines, losing 44%, amid investor concerns that its new pricingstrategy would not be a cure-all for declining sales and lack ofmomentum in the hyper-competitive retail world.