As we come to the close of the year, we look at the best & worst performing S&P500 stocks of 2022 as at market closing on 22 Dec 2022.
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Top 5 S&P500 stocks
In the top performers list, as one would have expected, many of the top performers are in the energy sector due to the elevated oil prices, hence we are looking at the top 5 performers but with only 1 stock from the energy sector and the next 4 best performers.
| S&P500 ranking | Company name | Ticker | Sector | YTD performance |
| 1 | Occidental Petroleum | NYSE:OXY | Energy | 113.2% |
| 2 | Constellation Energy | NASDAQ:CEG | Utilities | 108.0% |
| 9 | Enphase Energy | NASDAQ:ENPH | Technology | 63.4% |
| 14 | Cardinal Health | NYSE:CAH | Healthcare | 56.5% |
| 21 | Arch Capital Group | NASDAQ:ACGL | Financial | 41.4% |
1) Occidental Petroleum (NYSE:OXY) +113.2%
What are the chances the top performer of the S&P500 is an Energy company and one that is owned by Warren Buffett?
Occidental Petroleum is not only one of the largest upstream oil companies in the Permian basin, but it also operates midstream and chemical businesses.
It is also environmentally focused, with the company’s investor presentations highlighting a plan to use its current oil and gas operations as a cash-generating engine to incubate its carbon capture and sequestration plans. Occidental is uniquely positioned in this business because it has extensive assets and expertise in what is known as Enhanced Oil Recovery (EOR). EOR is a type of oil production that involves injecting CO2 into older oil and gas wells to repressurize the reservoir and extract more oil. This helps improves the operational, financial and environmental performance.
It is also worth noting that, Berkshire obtained regulatory approval to acquire up to 50% of Oxy while its stake in Oxy currently stands at 21.4%. The more Berkshire adds to its position in the oil stock, the more it’s likely to rise.
2) Constellation Energy (NASDAQ:CEG) +108%
Constellation is a power generation company and is the largest supplier of carbon-free energy in the United States. The company was spun off earlier this year from Exelon, which is a utility distribution and power generation company . Constellation is the leader in nuclear power, and also operates hydroelectric, solar, and wind power facilities with 90% of the company’s power output being carbon free.
The company has also set ambitious goals such as wanting to be 100% carbon-free in the utility assets it owns by 2040.
The company serves approximately 2 million residential, public sector and business customers, including three-fourths of the Fortune 100, helping these customers reach their own climate goals through innovative clean energy solutions.
With a focus on clean energy solutions, this stock has outperformed in a year where ESG and energy themed stocks are sought after.
3) Enphase Energy (NASDAQ:ENPH) +63.4%
Although classified as a Technology company, Enphase is actually the first Solar company to commercialise the solar micro-inverter, which converts power generated by a solar panel into grid compatible power for use or export. Enphase’s system enables people to make, use, save, sell, and own their power.
Similarly, with Solar being a clean energy solution and with electricity prices kept elevated due to higher oil prices, this stock has outperformed in a year where ESG and energy themed stocks are sought after.
4) Cardinal Health (NYSE:CAH) +56.5%
Cardinal Health is a distributor of pharmaceuticals, a global manufacturer and distributor of medical and laboratory products, and a provider of performance and data solutions for healthcare facilities.
The company operates in two segments, Pharmaceutical and Medical, which give it economic diversity. Pharmaceutical distributes branded and generic drugs and consumer products, while the Medical segment includes the company’s branded medical, surgical, and laboratory products.
As a distributor, Cardinal Health is a “middle-man” between drug manufacturers and patients who need those products in the field. Cardinal Health serves roughly 90% of U.S. hospitals, 60,000 pharmacies, and 10,000 doctor’s offices to bring pharmaceutical products to millions of patients.
As a company with a strong free cash flow, Cardinal Health is a Dividend Aristocrat as it has raised its payouts annually for more 36 consecutive years, making it a safe haven stock which is the reason why the stock has outperformed this year.
5) Arch Capital Group (NASDAQ:ACGL) +41.4%
Arch Capital Group Ltd is a leading global financial services company that writes insurance, reinsurance and mortgage insurance globally. Arch Capital is a growth stock and has seen its annual net premiums written increased nearly 3 times with its YTD3Q22 net premium exceeding its FY18 premium by 119%.
The company increases shareholder value through by selectively pursuing diverse specialty markets, maintaining flexibility and responsiveness to take advantage of market opportunities when they arise and by maintaining a disciplined underwriting approach to select risks and price them appropriately in all phases of the insurance cycle. This has enabled the company to grow its net asset value by an 13.8% CAGR in the last 21 years and an 8.4% CAGR in the last 4 years which is why the stock has outperformed.
5 Worst Performing S&P500 stocks
Now we look at the bottom performers and why they have significantly underperformed the broader market. The sectors from which the stocks are from are much more varied as most sectors and the overall market has been down this year.
| S&P500 ranking | Company name | Ticker | Sector | YTD performance |
| 500 | Generac Holdings | NYSE:GNRC | Industrials | -74.5% |
| 499 | Match Group | NASDAQ:MTCH | Communication Services | -69.9% |
| 498 | Align Technology | NASDAQ:ALGN | Healthcare | -69% |
| 497 | SVB Financial Group | NASDAQ:SIVB | Financial | -68.2% |
| 494 | Tesla | NASDAQ:TSLA | Consumer Cyclical | -64.4% |
1) Generac Holdings (NYSE:GNRC) -74.5%
Generac is a leading energy technology solutions company that provides backup and prime power generation systems for residential and commercial & industrial (C&I) applications, solar + battery storage solutions, energy management devices and controls, advanced power grid software platforms & services, and engine- & battery-powered tools and equipment.
Despite recording increased revenues as the reliability of electricity deteriorates while demand increased, the company has seen profits decline. The 2022 revenue growth forecast was lowered significantly from a 38% midpoint to a 23% mid point after it reported 3Q results as a customer filed for bankruptcy for which the company took a hit to its bottom line.
The company also has product warranty related issues and is facing class action lawsuits over a defective component at the core of its solar power products.
2) Match Group (NASDAQ:MTCH) -69.9%
Match Group owns and operates the largest global portfolio of popular online dating services including Tinder, Match.com, Meetic, OkCupid, Hinge, PlentyOfFish, UPWARD, Ship, and OurTime, totalling over 45 global dating companies.
Match Group is the typical tech stock that was well loved during in the early days of the pandemic as it grew rapidly and generated little profits. Hence as tech companies became unloved when revenue growth slowed and operating income decreased, the stock fell quicker than you can say “It’s a Match!”. Tinder, its highest revenue generator also became less popular and post disappoint results which led to the departure of the Tinder app’s CEO.
Unlike other consumer apps or tech companies, less than 2% of total revenue for Match Group is attributable to ad revenue which should have made the stock less volatile. However, users typically spend their discretionary income on Match Group which means that a deteriorating macroeconomic condition impacts user spend.
Match Group appointed a new CEO in May 2022 who was previously from Zynga, EA and Walt Disney with experience in publishing and channel strategy. One can only hope that he will turn around not only Tinder but the entire Match Group’s portfolio of online dating apps and services.
3) Align Technology (NASDAQ:ALGN) -69%
Align Technology is a global medical orthodontic and restorative treatment company which is well known for its Invisalign system and also its intraoral scanners. The company has posted revenue and profit declines on a QoQ and YoY basis.
The company has about 44% of its revenue from the US with Switzerland as the next major contributor at 34% while the remaining is contributed by China and the rest of the world.
Although Align is a healthcare company, its products can be viewed as somewhat consumer discretionary and hence its performance reflects continued macro-economic uncertainty and weaker consumer confidence, as well as a significant impact from unfavorable foreign exchange rates across all currencies.
4) SVB Financial Group (NASDAQ:SIVB) -68.2%
SVB Financial Group owns Silicon Valley Bank, the biggest bank in Silicon Valley and three other businesses, namely, SVB Capital, SVB Private and SVB Securities. Together, the SVB Financial Group offer services such as commercial banking, venture investing, wealth planning and investment banking.
SVB services nearly half of US venture backed technology and life science companies with total client funds of $354 billion and loans of $72 billion. Total deposits declined as these companies are typically in a cash burn stage and their cash burn has not adjusted to slower fundraising environment, affecting total client funds.
SVB expects continued pressure on client funds growth as further declines in private investment, exit activity and market-related gains until public markets stabilize.
Although Fed rate hikes are expected to persist, unlike other banks, SVB expects net interest income and net interest margin to decrease as balance sheet declines and funding mix shifts towards interest-bearing deposits and short-term borrowings.
The prolonged public market volatility and increasing economic uncertainty also present challenges for SVB.
5) Tesla (NASDAQ:TSLA) -64.4%
We recently covered Tesla, detailing 6 reasons why Tesla has fallen so much. Tesla had lofty valuations and was faced with weakening consumer demand and tough competition. Elon sold a lot of shares and was also distracted not only by SpaceX but also the recent acquisition of Twitter. This meant that Tesla had more problems which have not yet been resolved such as issues with hits engineering as well as delay in its new launches.
While Tesla’s growth story is probably still intact from the EV industry’s structural tailwinds as well as Tesla’s growth plans such as robotics, battery storage systems, electric semitrucks and other new revenue streams as well as expansion of production capacity, with so many reasons, one would probably have to be an Elon fan to buy tesla.
Closing statements
In summary, when looking at a company’s share price performance over the year, it is clear why companies outperform or underperform. Where there is a clear outperformance or underperformance when compared to the broader market, there is always not only a macro reason but also a company centric reason. Investors will do well to understand these reasons before determining if the trend would continue or an about turn is in sight.
