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5 Stocks That Went Up in the Current Market Capitulation

After a difficult 2015, a year in which the markets declined, investors hoped that 2016 would bring better days for the stock market. Unfortunately, that did not happen, and the new year has gotten off to a forgettable start. Just in the first full week of market trading alone, the S&P 500 Index declined approximately 6%, amounting to the worst start to a year in four years.

The end result of all this is that investor sentiment has clearly deteriorated, and investors are bracing for further downside risk. But while the picture looks bleak, not all the news is bad. Some stocks have registered gains to start 2016.

Below, discusses five stocks that generated positive returns for investors last week and why they may continue to outperform going forward.

1. Time Warner {% dividend TWX %} — Up 10%

The first stock, and the one posting the most impressive gains last week, was Time Warner. The company continues to benefit from its leading Warner Bros. and HBO networks. Time Warner’s fundamentals are in great shape. Revenue and operating profit grew 6% and 19%, respectively, in the first nine months of the fiscal year.

And, the stock saw positive momentum as some of the company’s largest institutional investors recently urged the company to sell itself or pursue a spin-off of the highly popular HBO.

2. Walmart Stores {% dividend WMT %} — Up 3.7%

Walmart stock performed poorly in 2015, but the company is a very defensive stock that tends to go up when the market suffers a steep decline. It also does better when oil prices fall because declining prices at the pump gives its customers more disposable income in their pockets. This is why Nomura recently upgraded the stock and called it the firm’s “best $35 oil idea.”

Plus, Walmart has some exciting growth catalysts for the future, including its e-commerce business and its small-store format. Walmart’s smaller neighborhood markets banner grew comparable sales by 8% last quarter. Separately, its e-commerce business grew revenue by 10% last quarter.

Walmart is also a dividend aristocrat, having increased its dividend for more than 40 years in a row. The stock currently yields 3.3%.

3. Spectra Energy {% dividend SE %} — Up 3.6%

As a major natural gas company, Spectra Energy has been beaten down as natural gas prices collapsed. Over the past year, Spectra Energy shares fell 28%. But it’s midstream transportation business continues to perform well. Its pipelines work very similarly to toll roads, collecting fees based on throughput volumes. As a result, Spectra Energy is less exposed to falling commodity prices than exploration and production companies.

This is why Spectra’s fundamentals have held up relatively well, even as its stock price drops. In an attempt to boost investor confidence, Spectra recently raised its dividend by 9% and the stock now yields 6.5%.

4. Dominion Resources {% dividend D %} — Up 3.7%

Dominion outperformed the broader indexes last week because it is widely viewed as a safe haven stock. As a utility, Dominion is largely shielded from the worries over the rising U.S. dollar and fears of slowing economic growth in China.

Utilities enjoy a very recession-resistant business model. Consumers need to keep the lights on, no matter the condition of the broader economy. That means that utilities like Dominion can usually keep their profitability intact, even during a recession. In addition, Dominion is a top dividend stock. It yields 3.7% and last month raised its dividend by 8%. The dividend increase makes 13 years in a row of consecutive dividend growth for the company.

5. Macy’s Inc. {% dividend M %} — Up 2.6%

Macy’s benefited from two major announcements. First, it is pursuing a massive cost-cutting effort as part of a business restructuring plan. The company announced it would cut 2,500 jobs and close five stores in the hopes of generating $100 million in annual cost savings. In addition, Macy’s was again urged by activist investor Starboard to pursue a strategy to monetize a portion of the company’s massive real estate holdings. Starboard has a 1% stake in Macy’s and believes the stock is worth $70 per share.

The Bottom Line

Stocks got off to a very bad start in 2016, and as investor sentiment deteriorates it is hard to foresee an imminent recovery up ahead. But as the old saying goes, there is always a bull market somewhere. There were indeed stocks that went up last week, even as the broader markets took a dip. Time Warner, Walmart, Spectra, Dominion and Macy’s outperformed in a very tough week.