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Below is Value Expectations’ analysis of the companies in the S&P 500 with the 10 best and 10 worst returns for 2009 YTD (excluding financial companies). Comparing the sales growth expectations priced in (VE sales growth) to what the company has delivered in sales growth historically allows us to see which firms have the most reasonable sales growth expectations implied by their current trading prices and thus are more likely to outperform. Will the companies with the best returns be able to maintain their momentum for the remainder of 2009? Will the companies with the worst returns be able to turn things around? We will track the S&P500 winners and losers in the year ahead and provide you with regular updates.

10 Worst S&P 500 Companies 2009 YTD

10 Best S&P 500 Companies 2009 YTD

*data as of close Feb. 20, 2009

*AFG’s Value Expectation allows us to understand the imbedded Sales Growth, EBITDA Margins, and Asset Turnovers a company has to deliver in the future to justify its current trading price. In theory and in normal circumstances, if the imbedded future performance is very conservative relative to the company’s historical performance, the stock is regarded as undervalued. The table displays the implied future sales growth of companies assuming their EBITDA margins and Asset turnovers stay at the 5 year median levels.

Here are the best and worst performing stocks in the S&P 500 for the month of January excluding financials. Compare the implied sales growth priced-in to justify the current trading price (VE Sales Growth) vs. what the company has delivered in sales growth the past 5 years (5 Year Median Sales Growth) to see if the expectations are realistic for the company to achieve. The more realistic the expectations are compared to what has been delivered the more likely the firm will be to out-perform.

Top 10 stocks in January (excluding financials) and Sales Growth Expectations

Worst 10 stocks in January (excluding financials) and Sales Growth Expectations

With just a few trading days under our belt in 2009, these stocks have made the biggest moves so far according to Bespoke.com. Will these stocks continue the January hot/cold streak into the rest of the year or is this just a fluke. Only time will tell. We measured the implied sales growth priced-in to justify their current price (VE Sales Growth) against what these firms have delivered in sales growth for the past 5 years to see which companies have low or reasonable expectations. Companies with low expectations for sales growth priced-in relative to what they have been able to deliver are the ones that are more likely to out-perform.

VE Sales Growth calculated on 1-13-09

These lists exclude financials.

Nearly all of the biggest return earning companies in the S&P 500 are firms that have been beaten up over the past few months but have bounced back to provide the biggest return in the entire index for the month of December. These firms have ended 2008 on a high note and move into 2009 with what they hope to be sustainable momentum.

The list of companies in the S&P 500 with the worst returns in December had also been trending downward for the past few months but were unable to muster a year-end turnaround as those on the other list had been able accomplish. Many of the firms on this list have something to do with oil, as their stock prices have been highly correlated with the falling price of oil.

Compare the sales growth priced-in to justify the current stock price (VE Sales Growth), to what the company has been able to deliver the past 5 years in revenue growth (5 Year Median Sales Growth), to see which companies have reasonable expectations of achieving the Sales Growth priced-in. Companies with low expectations relative to what they have been able to achieve are more likely to out-perform.

Sales Growth Expectations for the Highest Return Companies (S&P 500) - December

**denotes only 2 years historical sales growth available (2 year median used)

Sales Growth Expectations for the Lowest Return Companies (S&P 500) - December

VE Sales Growth Calculated for these firms on 12/26/08.

The timing and performance of the stock market had an important impact on the outcome of the election just as the outcome of the election has had an impact on these 20 stocks since the election-day.
Listed are 10 of the best and worst performing stocks in the S&P 500 (excluding financials) since the November 4th election and their 5 year implied sales growth that the company needs to earn to be fairly valued at the closing price on 12/1/08.

*LIZ has since been removed from the S&P 500

                                           Biggest Winners Since The Election

                                       Biggest Losers Since The Election 

 Recently we also screened the S&P 500 to identify investment opportunities and identified over 150 companies (industrials) that have negative sales growth expectations embedded into their current market valuations. These companies include high quality companies such as: COH, DOW, CAH, TGT, JNJ, UTX, SBUX, and WAG, among others. If you would like to Read our study Click Here