Breakout

Loyalty Does Not Run Deep Amongst Hot Stocks

Breakout

It didn't take much to find out how thin the loyalty is towards some of the year's hottest stocks. While a 4% decline over a five-day period is certainly a justifiable selling event, the degree to which that selling occurs says a lot about the underlying level of conviction investors have for a particular idea.

To test this theory, I went "Into The Data Mine" and what I discovered both confirmed suspicions but also surprised me in three particular instances.

First, the validation part. If you start with the 10 biggest percentage gainers in the S&P 500 this year (which are all up anywhere from 40-90%), six of them are down so far in April, and five of the six are down more than the market.

While it is not surprising to see super hot stocks like Sears (SHLD) and Netflix (NFLX) shedding 10-15% in just a few rough days, it is arguably way more telling to see which of our top-10 "stock rockets" held their ground when they came under fire, and the list is not long.

Like so many things about the stock market lately, Apple (AAPL) made the "loyalty cut" by gaining another 5% in the past week, on top of a 50% gain for 2012, but you probably would have guessed that since no fund manager on earth would trade their best player.

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Apple (AAPL) vs. S&P 500

That said, the loyalty in ownership shown to the other three hot shots is telling and a surprise.

Watchmaker Fossil (FOSL), the newest member of the S&P 500, has tacked on about 3% since being added into this exclusive club at the end of March. Even so, it's up almost 70% this year and nobody's selling.

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Fossil (FOSL) vs. S&P 500

Priceline (PCLN) also didn't see any profit-taking at a time when 90% of its index peers did. The highest priced stock in the index ($735/share) is up 2% in April and now almost 60% for 2012 and analysts aren't about to blink since 75% of them rate Priceline a "Buy."

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Priceline (PCLN)

And finally, it looks like the love runs deep for Salesforce.com (CRM) which crept up another 2% in a down market and can now boast a 50% year to date pop.

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Salesforce.com (CRM)

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