The top three stocks on the SP 500 in May

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The S&P 500 surged 4.8% higher in May, reaching 5,278 at month’s end. It proved to be the second-best month of 2024 so far after the 5.2% return in February.

Year to date, the S&P 500 has risen 10.6%, which is better than a lot of analysts and Wall Street pundits had projected. The index’s return is only slightly below that of the Nasdaq Composite, up 11.5% YTD, and ahead of the Dow Jones Industrial Average (up 2.6%) and the Russell 2000 (up 2.1%).

May was marked by solid corporate earnings and inflation rates that dropped after a couple months of increases. It also seems the likelihood of no interest-rate cuts in June or July has been baked in, so investors aren’t overreacting as much as they were.

The technology sector led the way in May, rising about 10%, followed by utility stocks, which gained 5%, and communication services, up 4%. Two of the top three best-performing stocks in May came from those sectors, while the other was a retailer.

1. First solar, up 53% in May

First Solar (NASDAQ:FSLR) posted excellent first-quarter earnings results at the beginning of the month, beating earnings and revenue estimates by a wide margin. Year over year, the company’s net earnings rose to $2.21 per share from 40 cents per share in Q1 2023, while its net sales increased 44% to $794 million.

However, those results did not move the needle much on First Solar’s stock price. The big jump came in mid-May, when the Biden administration slapped higher tariffs on Chinese imports of solar panels and other clean-energy items, including electric vehicles.

These tariff increases should help domestic manufacturers in the U.S. thrive, and the biggest beneficiary should be First Solar, the largest U.S. manufacturer of solar panels and equipment.

First Solar’s stock price skyrocketed on the news, and it received a slew of price-target increases from analysts, including Morgan Stanley, which raised it from $248 to $331.

First Solar stock is currently trading at $273 per share, up 58% year-to-date (YTD).

2. Deckers outdoor, up 33.5% in May

Deckers Outdoor (NYSE:DECK) is a shoe manufacturer and retailer that owns two of the hottest brands: Hoka and Ugg. Most of the stock’s monthly gains followed the release of its fourth-quarter earnings results on May 23.

Deckers smashed earnings estimates for Q4 of its FY2024. The company’s net sales climbed 21% year over year to $960 million while its earnings per share jumped 43% to $4.95 per share. Hoka sales increased 34% to $533 million, and sales for the Ugg brand shot up 15% year over year to $361 million.

For fiscal 2025, Deckers projects a 10% increase in net sales to $4.7 billion with diluted earnings per share of $29.50 to $30, which would be up by 1% to 3% year over year.

The company also received a lot of analyst upgrades following those robust earnings results. However, the median price target for Deckers stock is now $1,080, up only slightly from its current price of $1,076.

Deckers stock is already up 60% YTD.  

3. NVIDIA, up 32% in May

NVIDIA (NASDAQ:NVDA) has been in most monthly leader lists over the past couple of years, and it continues to surge, fueled by its AI-enabled graphics processing unit (GPU) chips.

In May, the chipmaker’s stock price jumped after it delivered another blowout earnings report, once again topping estimates. NVIDIA posted record quarterly revenue of $26 billion, up 262% year over year and 18% from the last quarter. Earnings per share climbed 629% year over year and 21% from the previous quarter to $5.98 per share.

NVIDIA’s outlook for its second fiscal quarter is $28 billion in revenue, which would be another record.

The chipmaker also announced plans for a 10-for-one stock split on June 7, which also helped boost its stock. NVIDIA is currently trading at $1,150 per share, but the price will be roughly one-tenth of that following the stock split, potentially opening it up to more investors.

NVIDIA stock is now up 138% YTD. The company is a juggernaut with massive earnings power that will only continue to grow, driving its stock price higher and higher.

The one thing to watch is its valuation. Because NVIDIA shares have risen so high so fast, they are bound for some corrections and volatility. However, as a long-term play, NVIDIA is the best of the three stocks.