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Tuesday, March 30, 2010

Top 10 S&P 500 Stocks Change from 2007 Peak

USA Today
Beneath the surface of the market's steady advance, a dramatic race is taking place among leaders vying to become the USA's most-valuable company.

The Standard & Poor's 500 index hangs near bull market highs, having risen 4% this year and 66% from its 2009 bear market low. Four of its most 10 most-valuable companies —Wal-Mart, Apple, JPMorgan Chase and Berkshire Hathaway — weren't among the top 10 at the market's peak in 2007, according to data from S&P's Capital IQ.

This reshuffling may provide clues which company and industry will lead as stocks continue to claw their way back. "It's a changing landscape," says Jack Ablin of Harris Private Bank. "It's amazing."

The race to the top is revealing some trends in the market's mega leadership, including:

•The rise of Apple from underdog to titan. The biggest gainer among the top ranks is Apple, which appeared close to collapse 10 years ago but is now the fourth-most-valuable company in the S&P 500, beating out Warren Buffett's Berkshire Hathaway and General Electric.

Apple shares hit a new high Friday, giving it a value of $209 billion, just behind Wal-Mart at $212 billion and closing in on No. 2 Microsoft at $260 billion. (ExxonMobil at $314 billion is No. 1.) With the rising value comes a richer price, though: Apple trades at 22 times its earnings the past 12 months, vs. 15 for Wal-Mart and 16 for Microsoft.

•The resurgence of technology. The tech industry overall has regained the leadership crown. Tech companies account for 19% of the S&P 500's market value, making it the most heavily weighted sector of the 10 S&P tracks. Tech was the second-most-heavily weighted, trailing financials, at the 2007 market top, S&P says.

But tech's gains haven't been universal. Networking gear maker Cisco Systems was the eighth-most-valuable company when the market peaked in 2007, Capital IQ says. It's now No. 15.

•The decline of several stalwarts. AT&T and Citigroup have consistently been among the most-valuable companies. Both were in the top 10 at the 2007 peak. Now, though, Citigroup is ranked No. 21 even as two other banks have returned to the top 10 and AT&T is No. 14.

Certainly, it's too soon to count out former heavyweight companies and industries. There's still time for companies to show how they used the recession as a chance to retool for the recovery, says Doug Sandler of Riverfront Investment Group. "The market has been about fear vs. reality. Now it's about the companies that can deliver."