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The Century-Old Index: How A Basket Of Companies Turning 100 In 2017 Is Performing Against The Market

Shanthi Rexaline

Equity markets have been on a tear these days. The major averages are in record territory, with the backdrop of improving economic fundamentals, extremely accommodative monetary policy environment and a corporate-friendly regime at the helm all working in favor of equities.

S&P's Run Up

The S&P 500 closed Tuesday's session at a record high of 2,338, and the Dow Industrials also moved into unchartered territory, closing at 20,504. Meanwhile, the tech-heavy NASDAQ Composite ended at an all-time high of 5,783.

The recent leg-up seen since the presidential election has been masterminded by the perceived benefits of deregulation and several measures, including the reduction in corporate taxes and huge infrastructure spending, to spur growth and protectionists policies.

Related Link: Dow Under 19,000 Or Dow At 20,000: What Happens First?

A longer-term perspective of five years shows that the S&P 500 Index was broadly higher from 2012 until mid-2015. In fact, the rally commenced well before it and was in the works since early 2009, as the economy emerged out of a recession-induced by the financial crisis of 2007–2008.

A Host Of Factors Helped

Stimulatory fiscal and monetary policies by governments and global central banks and their continued reassurance of handholding encouraged investors to get back to their buying ways. Subsequently, from mid-2015, the index got itself into a consolidation phase and was in a broad trading range until the post-election rally took hold. The S&P 500 Index generated a normalized return of 73.09 percent over the five-year timeframe from February 2012.


^SPX Chart

^SPX data by YCharts

Source: Y Charts

Celebrating A Century Knock

Even as the broader markets have been grinding higher, Benzinga looked at how some of the companies, which would be celebrating their centennial year of existence in 2017, have fared relative to the broader market in the same time period.

The six companies that met the criterion are:

  • Oshkosh Corp (NYSE: OSK).
  • Phillips 66 (NYSE: PSX).
  • SpartanNash Co (NASDAQ: SPTN).
  • Suncor Energy Inc. (USA) (NYSE: SU).
  • Washington Federal Inc. (NASDAQ: WAFD).
  • Barnes & Noble, Inc. (NYSE: BKS).

Oshkosh

Oshkosh is a manufacturer of specialty vehicles and vehicle bodies and is based in Wisconsin. The company operates under four business segments, namely access equipment, defense, fire and emergency, and commercial.

Stock Return (Since 2012): 193.1 percent.

Phillips 66

Phillips 66 is a multi-national company headquartered in Westchase, Houston. It was spun off from ConocoPhillips (NYSE: COP) in 1917.

Stock Return (Since 2012): 144.1 percent.

SpartanNash

Spartan Nash is a food distributor and grocery store retailer based in Byron Center, Michigan. The company is the largest distributor serving military commissaries and exchanges in the United States.

Stock Return (Since 2012): 113.7 percent.

Suncor Energy

Suncor Energy is an integrated energy company based in Calgary, Alberta, and it specializes in the production of synthetic crude from oil sands.

Stock Return (Since 2012): (-11.3) percent.

Washington Federal

Washington Federal is a Seattle-based bank holding company. Though having set up shop as Ballard Savings and Loan in 1917, it adopted the name of Washington Federal Savings and Loan after merging with it in 1958.

Stock Return (Since 2012): 109.3 percent.

Barnes & Noble

Barnes & Noble is the largest retail book seller in the United States, and it is also a retailer of content, digital media and educational products. The company has weathered the general malaise that plagued the bookstore industry since the 1990s, when several of them were forced to either merge or go bankrupt.

Stock Return (Since 2012): 22.61 percent.

Findings

For comparison purpose, we looked at how a portfolio consisting of the six stocks founded in 1917 would have done in since 2012, if each of the stocks would have been held in equal proportion in the portfolio.

  • The average returns by holding each of these stocks for a five-year timeframe is 95.25 percent.
  • When Suncor, which generated a negative return is stripped off, the return improves to 116.56 percent.
  • Taking off Barnes & Noble, which was another drag on the average return, the said portfolio generated an average return of 140.05 percent.

The centurions, thus, vouch for the veracity of adages that celebrate all that is old, as even with the laggards the portfolio generated an average return in excess of the S&P 500 Index. An investor, who might have preferred to cling onto these oldies would never have been disappointed. After all "Old is Gold," don't you agree?

Image Credit: Curb market at Broad Street. It later became the en:American Stock Exchange. In the background there's the NYSE building under construction, 1902, By Falk - This image is available from the United States Library of Congress's Prints and Photographs division under the digital ID pan.6a12056. See Commons:Licensing for more information. Public Domain, via Wikimedia Commons

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