Natural gas firms among top stock winners of 2011

By
Matt Krantz, USA TODAY
December 28, 2011, 8:10 PM ET
3 min read

— -- Investors lucky enough to unearth the stock market's bright spots are escaping the dungeon of ho-hum returns.

It's been an underwhelming year for stocks, with the Standard & Poor's 500 down 0.6% in 2011. But investors who picked up on some emerging trends steering stocks made some serious money despite a flat market.

There was no shortage of big winners. The year's best S&P 500 stock, Cabot Oil & Gas, doubled during the year, and another eight in the benchmark index soared 50% or more during 2011. Such big gains are especially lucrative for investors who hit it right, since the overall market has been essentially dead money all year.

"You've had some big divergences, even in areas you'd think would move together," says Jack Ablin of Harris Private Bank.

Among big-picture themes powering stocks despite the broad market's sputtering include:

•Key players in the natural gas business. With its 101% gain this year, Cabot Oil & Gas cog is the S&P 500's best so far. And right behind it is another gas player, El Paso ep , up 91%.

Despite the fact natural gas prices have been falling this year, producers such as Cbot Oil are gaining appreciation with investors due to their ability to boost production, says Gabriele Sorbara of Caris.

•Leaders in serving the frugal consumer. While consumers may feel the pinch of the economy, they're still shopping, says Mark Montagna of Avondale Partners.

Shares of discount retailers Ross Stores rost and TJX tjx are up 53% and 46%' respectively, as they cater to consumers who still want well-known brands, but either can't afford or aren't willing to pay full retail, he says.

•Benchmarks in quality. Investors are rewarding financially conservative companies. S&P companies with A+ stock-quality ratings from S&P are up 10.4% this year, topping gains of companies with lower ratings, Ablin says. Low debt is a selling point with investors, Ablin says.

Payment processors MasterCard ma and Visa v are up 67% and 43%. Both eliminated all their long-term debt, fitting investors' taste for quality. Both are also getting investor attention as fears of new debit card rules subside, says Thomas McCrohan of Janney Montgomery Scott.

Investors might be tempted to write off 2011 as a do-nothing year, yet, key themes continue to carry into 2012. "High quality is beating the lower quality," Ablin says.