As the US equity market has rallied over the last decade, share prices have risen dramatically. When the S&P 500 hit is Financial Crisis low on March 9th, 2009, there were just six stocks in the S&P 500 trading above $100/share. At the same time, there were 119 stocks in the index (24%) trading with a single-digit share price of less than $10. Fast forward to today and there are now 235 stocks (47%) in the S&P 500 trading above $100/share, while there is just one — ONE — stock in the index trading below $10/share. The one stock trading with a single-digit share price is also a single-letter ticker — Ford (F).
We are constantly running our decile analysis on the S&P 500 to see which stock characteristics are driving performance within the index. To do this, we break the index into deciles (10 groups of 50 stocks each) based on things like P/E ratio, market cap, dividend yield, analyst ratings, etc., and then we calculate the average performance of the stocks in each decile over a given time period.
Share price is a very basic stock characteristic that most people don’t (nor should they) use as an investment factor. But when we ran our decile analysis recently, we still found it notable that the highest priced stocks in the S&P are outperforming the lowest priced stocks by quite a bit. As shown below, the 50 stocks in the S&P with the highest share prices at the start of the year are up an average of 3.67% year-to-date. The next 50 stocks with the highest share prices are up an average of 4.03% YTD. On the other end of the spectrum, the 50 stocks with the lowest share prices at the start of the year are up just 1.4% YTD, while the next 50 lowest-priced stocks are up just 0.77%.
In case you’re interested, below is a snapshot of our full decile matrix so you can see the other stock characteristics we like to analyze. This analysis is very helpful for finding underlying trends that are driving market performance. To unlock the full matrix, start a two-week free trial to Bespoke Premium then view our recent B.I.G. Tips report at this link.