Investing

The Best Investments of 2011

2011 was a volatile year for investors: Although the S&P 500 was on track to close the year relatively flat (up about 0.7 percent), the big money was made in nontraditional places.

The following slides show the best investments in each category, from stocks and commodities to currencies and companies, with the best cash flows. If you made some of these investments, you were on the right track. If not, lessons learned in 2011 could prove profitable in the year ahead.

So, what were the best investments of the year?

Note: All numbers are as of market close on December 27.

Best Currency

If your money was denominated in Yen, you were in luck. Just like the two previous years, the Yen was the strongest performing major currency against the U.S. Dollar, up 4 percent. In fact, back in October, the greenback traded at around 75.5 Yen per U.S. Dollar, a record low.

In addition, the U.S. Dollar index was up about 1 percent in 2011, mostly because of economic woes in the eurozone, which has taken a hit on its currency. Versus the U.S. Dollar, the Euro has depreciated 2 percent, followed by a 2 percent loss for the Swedish Krona, and a 2 percent drop for the Canadian Dollar.

Best Commodity

Live cattle takes the prize as the best commodity, up 21 percent in 2011, as it was the best performer on the CRB index of 19 commodities. Heating oil takes second place, with a gain of 14 percent, followed by gold, up 12 percent.

Last year’s best-performing commodity, cotton, which saw a jump of 92 percent, it is now the worst, down 39 percent in 2011.

Best World Index

The S&P 500 and Dow are among the few global indices in the black for the year. That compares to a 53 percent loss for Greece, 23 percent decline for India and China, respectively, 21 percent drop for Russia, and 16 percent fall for Brazil.

Many world markets posted sharp declines in 2011 on concerns over slow economic growth, rising debt levels, high unemployment, and inflation. Indeed, The FTSE CNBC Global 300 index is on track to close the year down nearly 7 percent.

Best Company / Top 3 in the S&P 500

Cabot Oil & Gas (COG), an independent energy firm, led gains in the S&P 500 index in 2011, up 106 percent. The company’s stock hit an all-time high of $90 in November, and is currently trading off those levels.

Other Top Performing S&P 500 stocks:
Intuitive Surgical (ISRG) 80 percent
MasterCard (MA) 67 percent
Biogen (BIIB) 66 percent

Last year’s darling of investors, Netflix, which rose 219 percent, is now down 60 percent in 2011.

Note: We are excluding El Paso (EP) because the company is being acquired by Kinder Morgan. El Paso stock is up 92 percent year-to-date.

Best Dividend Stock

The best performing dividend company was Lorillard (LO), with a dividend-adjusted return of 46 percent in 2011. It currently has a dividend yield of 4.6 percent. Other top performers include H&R Block (HRB), up 41 percent with a 5 percent yield, Bristol Myers Squibb (BMY) with 39 percent growth and a 3.9 percent yield, and Progress Energy (PGN) up 39 percent and a yield of 4.4 percent.

In the S&P 500, 395 companies currently pay dividends and these companies generally attract different investors with different expectations for growth. Among these stocks, CNBC.com looked at the ones with yields greater than 2 percent, which is the current yield on a 10-year Treasury note. The criteria for selecting winners in this area included a combination of dividend payments and pure price appreciation.

Best IPO

The best performing IPO of the year was nutritional-product retailer GNC (GNC), up 83 percent from its initial filing prices.

Despite a strong start in the first half of the year, the initial public offering market slowed, as more companies delayed their offerings due to uncertainties in the global economy. A total of 125 companies made their stock market debut this year, compared with 153 in 2010.

Other high performing IPOs*
Imperva (IMPV) 82 percent change
Tangoe (TNGO) 58 percent change
Tesoro Logistics (TLLP) 57 percent change
*Since first closing price

Best Small/Mid Caps

Small and medium caps underperformed large-cap companies. Whereas the S&P 500 gained around 1 percent this year, small and mid-cap indices fell 4 percent and 2 percent, respectively.

Below are the top stocks in each index.

S&P MidCap 400
Hansen Natural (HANS), up 82 percent
WellCare Health Plans (WCG), up 81 percent
Regeneron Pharma (REGN), up 70 percent

Russell 2,000 (Small-cap)
Inhibitex(INHX), up 309 percent
Medivation (MDVN), up 209 percent
Golar (GLNG), up 197 percent

Best Short Trade

First Solar (FSLR), one of the most consistently shorted stocks in the S&P 500, is on track to close 2011 with a loss of 75 percent.

At its high in May 2008, the manufacturer of solar modules using thin-film semiconductor technology, was valued at $25 billion. Since then, its market capitalization has been reduced by 89 percent to $2.8 billion.

Other Highly Shorted Stocks, according to S&P Capital IQ
Gamestop (GME)
Sears (SHLD)
U.S. Steel (X)

The Best Investments of 2011” was provided by CNBC.com.