Broadly speaking, it's been a tough and volatile year for the stock market.
But some stocks have managed to generate stellar gains anyway.
There isn't a sector-specific trend among these three outperformers.
President Donald Trump's first 100 days proved tumultuous for the stock market. Trump instituted tariffs in his bid to bring more manufacturing jobs back to the U.S. and shake up global trade. The broader S&P 500 would go on to shed about 8% during that time period, the worst performance during a president's first 100 days since 1974.
But not all stocks in the broader benchmark index have struggled. In fact, some have done quite well. Three, in particular, have done the unthinkable and blasted at least 45% this year (as of April 28).
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1. Palantir -- Up 47%
Artificial intelligence (AI) has been considered the darling trade of Wall Street for the last couple of years. But high valuations, questions about demand, and tariffs have hurt the segment this year. The AI decision-making company Palantir(NASDAQ: PLTR) hasn't blinked, however, surging 47%.
Despite an extremely high valuation, Palantir has defied expectations all year long. It started when the company reported fourth-quarter earnings in February. Not only did the company beat Wall Street estimates, but it guided for as much as $3.76 billion of revenue this year, ahead of estimates calling for $3.52 billion.
CEO Alex Karp could not have sounded more confident, saying that the company is "... still in the earliest stages, the beginning of the first act, of a revolution that will play out over years and decades" and that the company has been preparing for this moment for more than two decades.
Given how much work Palantir does for the government, investors might have assumed revenue could be in trouble, given the Trump administration's effort to radically cut federal spending. But in mid-April, the North Atlantic Treaty Organization (NATO) announced that it would use one of Palantir's systems to assist the organization with its military operations in the Transatlantic. NATO also commented that the contract "was one of the most expeditious in [its] history, taking only six months from outlining the requirement to acquiring the system."
Palantir has been very effective at showing businesses and organizations just how quickly its AI and machine-learning capabilities can help better analyze data and quickly solve pain points, leading to better decision-making and cost savings. The stock continues to defy gravity, but trading at nearly 198 forward times earnings, I'm still cautious about the name.
2. CVS Health Corp -- Up 45%
The pharmacy giant CVS Health Corp(NYSE: CVS) has essentially moved in the opposite direction of the market.
In 2024, while the stock market raged, CVS' stock plummeted 40%. Last year, CVS had to lower guidance multiple times after it underestimated costs in its Aetna insurance business. Costs rose more than expected after seniors enrolled in Medicare Advantage used healthcare services more than expected. Meanwhile, millions of people previously enrolled in Medicaid were removed from the program, leaving a pool of less healthy people that led to higher costs.
But now it looks like CVS could be turning the corner. The company beat Wall Street estimates on earnings and revenue in the fourth quarter of the year, while guiding for $5.75 to $6.00 of adjusted earnings per share, which is in line with what analysts had been forecasting.
Management, led by new CEO David Joyner, seems to have a better handle on the insurance costs and sees an opportunity to unlock earnings and improve margins at Aetna. Joyner said the company expects to reduce Medicare Advantage membership in the high-single-digit percentile from the end of 2024, which will lead to lower expenses and hopefully help improve Aetna's margins into the 3% to 5% range.
CVS is also benefiting from the Centers for Medicare and Medicaid Services' (CMS) decision to up reimbursement rates for Medicare Advantage from a 2.2% proposal to 5.1%. The healthcare services sector still faces policy uncertainties, particularly around how the Trump administration plans to approach pharmacy benefit managers.
CVS trades around 11 times forward earnings, slightly above its five-year average, so I'd call this stock a moderate buy, certainly a good choice if you want exposure to this particular sector.
3. Newmont Corp -- Up 45%
Newmont Corp(NYSE: NEM) is the world's leading gold mining company with probable gold reserves of 134.1 million ounces and operations in the U.S., Canada, Mexico, Dominican Republic, Peru, Suriname, Argentina, Chile, Australia, Papua New Guinea, Ecuador, Fiji and Ghana. The company also mines copper, silver, lead, zinc, lithium, uranium, coal, and nickel.
Newmont has clearly benefited from gold's incredible surge over the last few years. The fiscal situation of the U.S. is clearly worrying investors.
The U.S. government operated at a $1.83 trillion deficit in 2024 and has more than $36 trillion of debt. Investors who regularly purchase U.S. Treasury notes and bonds, particularly on the longer end of the maturity scale, are now questioning if these bonds, which have the full backing of the U.S. government, are still as safe as they once were.
Many think higher long-term inflation is inevitable, and gold often performs well in times of extreme uncertainty while also being viewed as a hedge against inflation.
While stocks have shown the ability to outperform gold in the long term, I think it's a good idea for investors to have some exposure to the commodity This will improve diversification within your portfolio, especially considering how concentrated the S&P 500 has become, and give you an asset that thrives when uncertainty increases.
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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool recommends CVS Health. The Motley Fool has a disclosure policy.
