MW Here are January's best and worst stocks - and what may lie ahead for them
By Philip van Doorn
There are many winners (and losers) that analysts expect will show double-digit gains over the next year
Despite all the fireworks on Monday, including a 17% decline for Nvidia's stock, the S&P 500 index ended January with a 2.8% gain and 72% of its stocks were up for the month.
Following are lists of January's best and worst-performing stocks in the S&P 500 SPX. And further down is a close look at performance and valuations for the index and its 11 sectors.
All investment returns in this article include reinvested dividends.
Nvidia's decline on Monday followed the news that DeepSeek was able to develop generative useful artificial-intelligence technology at a much lower cost than had previously been imagined. This caused concern among investors that spending on hardware used to develop artificial intelligence technology would slow. Nvidia has been dominating the installation of graphics processing units (GPU) by data centers during the AI infrastructure build-out.
See also: The blogger who helped spark Nvidia's $600 billion stock collapse and a panic in Silicon Valley
Following Nvidia's slide on Monday, the stock rose 1% through Friday, for an 11% decline for the month.
Read: Nvidia's CEO, whose chips play a key role in the DeepSeek drama, becomes latest corporate exec to pay a visit to Trump
Best-performing stocks in January
Here are the 20 stocks in the S&P 500 that showed the highest total returns for the month. The table also includes returns for the past three years and from the end of 2021 through January. After more than two years of extraordinary returns for the S&P 500, it might be useful to be reminded that during 2022, the index fell 18.1%.
Company Ticker Jan. return 2024 return 2023 return 2022 return Return from end of 2021 through Jan. Constellation Energy Corp. CEG 34% 93% 37% N/A N/A CVS Health Corp. CVS 27% -41% -13% -8% -39% GE Aerospace GE 22% 65% 96% -11% 251% Vistra Corp. VST 22% 261% 71% 5% 690% F5 Inc. FFIV 18% 41% 25% -41% 21% Starbucks Corp. SBUX 18% -2% -1% -13% -1% 3M Co. MMM 18% 46% -3% -30% 17% DaVita Inc. DVA 18% 43% 40% -34% 55% Meta Platforms Inc. META 18% 66% 194% -64% 106% Texas Pacific Land Corp. TPL 17% 115% -32% 91% 226% KLA Corp. KLAC 17% 9% 56% -11% 77% Builders FirstSource Inc. BLDR 17% -14% 157% -24% 95% CrowdStrike Holdings Inc. Class A CRWD 16% 34% 142% -49% 94% International Business Machines Corp. IBM 16% 39% 22% 11% 119% Air Products and Chemicals Inc. APD 16% 8% -9% 4% 19% Discover Financial Services DFS 16% 57% 18% -14% 87% Howmet Aerospace Inc. HWM 16% 103% 38% 24% 302% $Citigroup Inc(C-N)$. C 16% 42% 19% -22% 52% Henry Schein Inc. HSIC 16% -9% -5% 3% 3% Humana Inc. HUM 16% -44% -10% 11% -35% Source: FactSet
You might need to scroll the table to see the columns on the right.
Constellation Energy $(CEG.UK)$ was the index's best performer in January. The stock nearly doubled in 2024, as investors began to see it as an AI play. In September, Constellation entered a 20-year power-purchase agreement with Microsoft Corp. $(MSFT)$ and that it would restart the Three Mile Island nuclear plant in Pennsylvania. Through Jan. 24, shares of Constellation were up 55% for 2025. But the stock fell 21% on Monday, as the DeepSeek news had investors questioning just how much power Big Tech would need to implement AI hardware.
CVS Health $(CVS)$ ranked high among January's best performers, following two years of dismal performance. And Walgreens Boots Alliance $(WBA)$ would have also been on the list if its stock hadn't fallen 10% on Friday after the company suspended its dividend. Both stocks trade at low price/earnings valuations, as you can see on the next table. The entire healthcare sector might also be considered a bargain, as you can see in the last two tables at the bottom of this article.
Shares of GE Aerospace $(GE)$ returned 22% in January. This is the remnant of the old General Electric, which completed its process of splitting into three companies with the spinoff of GE Verona Inc. $(GEV)$ (the old company's power generation business) in April, which followed the separation of GE HealthCare Technologies Inc. $(GEHC)$ in January 2023. Tomi Kilgore dug into several catalysts for GE Aerospace last week.
Starbucks $(SBUX)$ was another January winner, with the stock returning 18%, despite a 4% year-over-year decline in sales for the fiscal quarter ended Dec. 29. Quarterly revenue was down 2.6% from a year earlier. The results came in better than analysts had forecast and analysts praised the company's efforts to right the ship under the leadership of Brian Niccol, who took over as the company's chief executive in September.
Meta Platforms $(META)$ rose 18% for January. Late on Wednesday the company reported that its fourth-quarter revenue had increased 21% from the year-earlier quarter and that its earnings per share had increased 50%. Michael Nathanson of MoffetNathanson Research called the company's full-year results "incredibly strong" in a note to clients on Thursday.
"Meta's ability to use AI to sustainably drive both engagement and pricing growth is a rarity in its (and the industry's) history," Nathanson wrote. He rates Mwta a buy, but left his price target for the stock unchanged at $710 - only 3% above Friday's closing price of $689.18.
Read: Forget DeepSeek. Zuckerberg says Meta will spend hundreds of billions on AI.
Before moving on to the list of the month's worst performers, let's take another look at the winners. The list is in the same order with forward price-to-earnings ratios and analysts' consensus price targets.
Company Ticker Forward P/E Share "buy" ratings Jan. 31 price Consensus price target Implied 12-month upside potential Constellation Energy Corp. CEG 32.5 76% $299.98 $331.30 10% CVS Health Corp. CVS 9.5 66% $56.48 $63.77 13% GE Aerospace GE 37.2 86% $203.57 $227.63 12% Vistra Corp. VST 23.6 83% $168.03 $188.18 12% F5 Inc. FFIV 20.1 6% $297.26 $305.60 3% Starbucks Corp. SBUX 33.6 46% $107.68 $107.85 0% 3M Co. MMM 19.3 55% $152.20 $160.07 5% DaVita Inc. DVA 15.2 9% $176.20 $166.29 -6% Meta Platforms Inc. META 27.1 85% $689.18 $738.02 7% Texas Pacific Land Corp. TPL 49.9 0% $1,297.17 $1,180.00 -9% KLA Corp. KLAC 23.1 65% $738.24 $835.04 13% Builders FirstSource Inc. BLDR 14.7 79% $167.28 $199.72 19% CrowdStrike Holdings Inc. Class A CRWD 91.0 76% $398.07 $390.15 -2% International Business Machines Corp. IBM 23.6 41% $255.70 $244.00 -5%
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Air Products and Chemicals Inc. APD 25.4 68% $335.26 $356.58 6%
Discover Financial Services DFS 14.3 42% $201.09 $210.31 5%
Howmet Aerospace Inc. HWM 39.0 77% $126.58 $129.38 2%
Citigroup Inc. C 10.7 74% $81.43 $91.66 13%
Henry Schein Inc. HSIC 15.6 40% $80.00 $79.00 -1%
Humana Inc. HUM 17.8 29% $293.23 $285.33 -3%
Source: FactSet
You can compare the P/E ratios to those in the sector/index summary below.
Among the 20 winners, there are six stocks with majority buy or equivalent ratings and consensus price targets that are more than 10% above the most recent closing prices.
Worst-performing stocks in January
Here are the worst performers among the S&P 500 in January.
Company Ticker Jan. return 2024 return 2023 return 2022 return Return from end of 2021 through Jan. Edison International EIX -32% 15% 17% -3% -10% PG&E Corp. PCG -22% 12% 11% 34% 29% Constellation Brands Inc. Class A STZ -18% -7% 6% -6% -25% ON Semiconductor Corp. ON -17% -25% 34% -8% -23% Electronic Arts Inc. EA -16% 7% 13% -7% -5% AES Corp. AES -13% -30% -31% 22% -49% Brown-Forman Corp. Class B BF.B -13% -32% -12% -9% -53% Deckers Outdoor Corp. DECK -13% 82% 67% 9% 191% Hershey Co. HSY -12% -7% -18% 22% -18% Las Vegas Sands Corp. LVS -11% 6% 3% 28% 25% Charles River Laboratories International Inc. CRL -11% -22% 8% -42% -56% Nvidia Corp. NVDA -11% 171% 239% -50% 309% Lamb Weston Holdings Inc. LW -10% -37% 22% 43% -1% Dell Technologies Inc. Class C DELL -10% 53% 96% -27% 98% Comcast Corp. Class A CMCSA -10% -12% 29% -29% -27% United Parcel Service Inc. Class B UPS -9% -16% -6% -16% -40% Viatris Inc. VTRS -9% 20% 2% -14% -5% Enphase Energy Inc. ENPH -9% -48% -50% 45% -66% Southwest Airlines Co. LUV -9% 19% -12% -21% -25% Expedia Group Inc. EXPE -8% 23% 73% -52% -5% Source: FactSet
The two worst performers for January were Edison International $(EIX)$ and PG&E $(PCG)$, which both provide electric utility services in California.
Coverage of EIX and PCG from Barron's:
-- This Power Stock Plunged Because of the California Wildfires. Here's Why It Could Rebound.
-- How PG&E Went From a Disastrous Utility to a Stock to Own-if You Dare
Shares of Electronic Arts $(EA)$ fell 17% on Jan. 23 after the company cut its forecast for video-game bookings, with disappointing results for its soccer and roleplaying game segments.
Several names on the list of biggest decliners in January have been affected by the DeepSeek news, with investors questioning expectations for spending on AI-related hardware. Companies that could be affected by a slowing of the hardware buildout include ON Semiconductor $(ON)$, Dell Technologies $(DELL)$ and of course Nvidia, whose 11% decline for the month made the list. Of course that might be considered a modest pullback, if you take a closer look at the performance numbers on the table, including a 309% total return for Nvidia since the end of 2021, despite a 50% drop for the stock in 2022.
Now you might be wondering which of these January losers might be expected to come roaring back. Leaving the group in the same order, here is a summary of analysts' price targets.
Company Ticker Forward P/E Share "buy" ratings Jan. 31 price Consensus price target Implied 12-month upside potential
Edison International EIX 9.4 60% $54.00 $81.84 52%
PG&E Corp. PCG 10.4 65% $15.65 $23.33 49%
Constellation Brands Inc. Class A STZ 12.5 71% $180.80 $240.57 33%
ON Semiconductor Corp. ON 12.7 57% $52.34 $78.81 51%
Electronic Arts Inc. EA 15.7 32% $122.91 $147.35 20%
AES Corp. AES 5.4 71% $11.00 $16.90 54%
Brown-Forman Corp. Class B BF.B 17.8 19% $33.01 $44.91 36%
Deckers Outdoor Corp. DECK 27.2 54% $177.36 $224.53 27%
Hershey Co. HSY 20.1 14% $149.25 $163.23 9%
Las Vegas Sands Corp. LVS 17.4 73% $45.83 $58.59 28%
Charles River Laboratories International Inc. CRL 16.5 24% $164.76 $192.25 17%
Nvidia Corp. NVDA 27.0 91% $120.07 $174.89 46%
Lamb Weston Holdings Inc. LW 17.3 47% $59.94 $67.75 13%
Dell Technologies Inc. Class C DELL 11.0 86% $103.60 $153.55 48%
Comcast Corp. Class A CMCSA 7.7 55% $33.66 $44.22 31%
United Parcel Service Inc. Class B UPS 14.1 59% $114.23 $136.41 19%
Viatris Inc. VTRS 4.3 9% $11.28 $13.17 17%
Enphase Energy Inc. ENPH 17.5 38% $62.28 $85.34 37%
Southwest Airlines Co. LUV 18.0 16% $30.71 $32.39 5%
Expedia Group Inc. EXPE 11.9 32% $170.95 $192.63 13%
Source: FactSet
The answer to the question posed above this table is "half of them." Ten of these companies have majority "buy" ratings and consensus price targets that are at least 20% higher than their closing prices on Thursday.
Expensive sectors
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Here is a look at how the 11 sectors of the S&P 500 performed for the month, along with annual returns going back to 2021.
Sector or index Jan. return 2024 return 2023 return 2022 return Return from end of 2021 through Jan.
Communication Services 9.1% 40% 56% -40% 43%
Healthcare 6.8% 3% 2% -2% 10%
Financials 6.6% 31% 12% -11% 40%
Materials 5.6% 0% 13% -12% 4%
Industrials 5.0% 17% 18% -5% 38%
Consumer Discretionary 4.4% 30% 42% -37% 22%
Utilities 2.9% 23% -7% 2% 20%
Energy 2.1% 6% -1% 66% 76%
Consumer Staples 2.0% 15% 1% -1% 17%
Real Estate 1.8% 5% 12% -26% -11%
Information Technology -2.9% 37% 58% -28% 50%
S&P 500 2.8% 25% 26% -18% 33%
Source: FactSet
The sectors are ranked by their January performance, and the DeepSeek scare helped make information technology the only sector to show a loss for the month.
One might argue that since the S&P 500 is weighted by market capitalization, there are really "three tech sectors" now. The Magnificent Seven group of stocks makes up nearly a third of the portfolio of the $630 billion SPDR S&P 500 ETF Trust SPY, which is designed to mirror the performance of the index by holding all 500 stocks. Among the seven, Apple Inc. $(AAPL)$, Microsoft Corp. $(MSFT.UK)$ and Nvidia are in the IT sector, while Meta Platforms Inc. (META) and Alphabet Inc. $(GOOGL)$ are in the communications services sector and Amazon.com Inc. $(AMZN)$ and Tesla Inc. $(TSLA)$ are in the consumer discretionary sector.
All three of these sectors were hit hard during the broad market decline in 2022. You might need to scroll the table to see the returns for the full period since the end of 2021. For that period, the energy sector has been the best-performing sector as its long recovery has continued. The IT sector has ranked second.
Now let's take a look at forward price-to-earnings valuations for the sectors and for the full index. These are weighted ratios of share prices to rolling consensus 12-month earnings-per-share estimates among analysts polled by FactSet. For most sectors and for the full index, these ratios are well above their long-term averages. Here is how the forward P/E for the full S&P 500 has moved since the end of 1999, which was close to the peak of the dot-com bubble that began to deflate in 2000.
Here are the 11 sectors again, sorted by forward P/E ratio, with the full index at the bottom.
Sector or index Forward P/E Forward P/E a year ago Current forward P/E to 10-year average Current forward P/E to 20-year average
Consumer Discretionary 30.5 25.8 114% 136%
Information Technology 28.0 28.0 136% 160%
Industrials 23.0 20.1 119% 136%
Consumer Staples 22.2 19.6 112% 125%
Communication Services 20.9 18.9 110% 120%
Materials 20.0 19.1 118% 131%
Healthcare 18.0 18.6 109% 120%
Real Estate 17.9 17.1 95% 95%
Utilities 17.7 15.2 101% 113%
Financials 17.2 15.0 120% 131%
Energy 14.3 12.0 102% 112%
S&P 500 22.1 20.3 119% 137%
Source: FactSet
Most of the indexes trade high relative to their long-term forward P/E averages - especially the IT sector. Only the real -estate sector is trading below its 10-year average forward P/E.
The energy sector trades at the lowest P/E by far. You can see on the table that its P/E has increased significantly over the past year, which is true of most of the sectors. But the IT sector's P/E is unchanged from a year ago, while the healthcare sector's P/E has declined.
Now you might wonder if any sectors might be bargain-priced, if we factor in expectations for growth over the next two years. This table shows projected compound annual growth rates (CAGR) for sales and earnings-per-share for the 11 sectors from 2024 through 2026, with the full index at the bottom.
Sector Two-year estimated sales CAGR through 2026 Two-year estimated EPS CAGR through 2026 Forward P/E
Information Technology 11.5% 19.4% 28.0
Real Estate 6.6% 5.8% 17.9
Communication Services 6.6% 13.2% 20.9
Healthcare 6.3% 15.3% 18.0
Consumer Discretionary 6.2% 13.6% 30.5
Financials 6.1% 11.3% 17.2
Industrials 6.1% 17.7% 23.0
Utilities 4.7% 8.2% 17.7
Consumer Staples 3.6% 6.6% 22.2
Materials 2.6% 15.2% 20.0
Energy 0.7% 11.2% 14.3
S&P 500 5.9% 14.1% 22.1
Source: FactSet
The CAGR projections are based on weighted consensus estimates among analysts polled by FactSet, with adjustments for companies whose fiscal reporting periods don't match the calendar.
The table is sorted by projected sales CAGR. It is no surprise to see that the expensive information technology sector tops the list for projected revenue and EPS growth rates.
But there is one sector whose P/E is lower than that of the full S&P 500 and whose projected sales and EPS CAGR are higher - the healthcare sector.
Click the tickers for more information about any stock, ETF or index.
Read: Tomi Kilgore's guide to the wealth of information available for free on the MarketWatch quote page
Don't miss: How a more focused growth index can cut your risk in the stock market
-Philip van Doorn
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