2021 was an incredible year for the stock market. The S&P 500 rose nearly 30% for the year, marking one of its best years ever. The majority stocks did very well. For proof of that, just look at the S&P 500 equal weight ETF’s year-to-date returns.
Still, the results were not shared evenly across all stocks. Most sectors rose, but some didn’t fare so well. In this article, I’ll share four categories of stocks that won the stock market in 2021.
Meme stocks were perhaps the breakout stock market story of 2021. They began rising in January, shortly after Redditor Roaring Kitty released a series of videos about GameStop. GameStop rallied over 1,900% in less than a month. Later, other stocks like AMC and Nokia joined in the fun. The meme stocks have since given up much of their gains but are still up enough to be among 2021’s biggest gainers.
You wouldn’t have heard it by reading the news, but Canadian bank stocks had a very good year in 2021. The S&P/TSX Capped Financials Index rose 33%, beating the S&P 500 and the NASDAQ. Part of that is simply the post-COVID recovery. The pandemic damaged banks’ financials via higher PCLs. Later, the risks waned, the banks lowered their PCLs, and earnings predictably spiked. That accounts for perhaps some of the earlier in the year action in bank stocks. Later, though, the banks started setting new earnings records, sending their stocks higher. The dividend increases probably didn’t hurt either.
Semiconductor stocks are another category of equity that did really well in 2021. NVIDIA was the best-performing mega-cap stock of the year, rising 135%. Smaller players like Micron Technology and AMD did very well, too. As a sector, semiconductors beat the S&P 500 by a country mile.
Last but not least, we have energy stocks.
While the past month hasn’t been kind to them, energy companies like Suncor Energy (TSX:SU)(NYSE:SU) have had a great year.
Suncor stock is up 47% for the year, and it’s a similar story with other integrated energy stocks. Most of these companies lost money in 2020 when COVID tanked the economy. But when 2021 arrived, the economy began re-opening, and the price of oil rose. As a result, companies like Suncor made more money than they did in 2020. In its most recent quarter, Suncor had $2.6 billion in cash flow, up 160%, and $877 million in profit, up from a loss. It was a solid year for Suncor. And 2022 could be a solid year for it as well, if the current wave of COVID passes and oil prices start rising again.
So, there you have it. The four biggest winners of the stock market in 2021. Between semiconductors, banks and energy, there have been plenty of risers out there. In fact, it was just a great year for stocks as a whole. Most likely, 2022 won’t be as good as this year was, but there will always be good stocks to buy if you know where to look.