By Noel Randewich
SAN FRANCISCO (Reuters) - For long-term shareholders of Netflix, the end of December marks an extremely rewarding decade.
Shares of the video-streaming heavyweight have surged over 4,100% since the end of 2009, making it the S&P 500's top performer over the past 10 years. Analysts mostly recommend investors keep buying the shares, even as the Los Gatos, California, company faces a surge in competition and questions about whether it can maintain its rapid user growth.
Graphic - Top S&P 500 performers of the decade: https://fingfx.thomsonreuters.com/gfx/mkt/13/43/43/Top%20overall%20winners.jpg
Graphic - Current S&P 500 constituents' worst performers of the decade: https://fingfx.thomsonreuters.com/gfx/mkt/13/44/44/overall%20bottom.jpg
DECADE'S WORST LOSERS GRAPHIC
The dramatic rise of Netflix's business and share price established the company as part of the so-called FANG quartet of high-growth stocks - along with Facebook, Amazon.com and Google-owner Alphabet - that captivated investors and accounted for much of Wall Street's rally in recent years. Netflix expanded its subscriber base from 12 million at the end of 2009 to 158 million last September.
But at the start of 2010, when mailing DVDs to customers was still a large chunk of Netflix's business, the average analyst recommendation for the company was "hold," making it one of the S&P 500 stocks least favoured by analysts at that time.
As well as being the top overall performer across the decade, Netflix was the S&P 500's strongest annual performer in 2010, 2013 and 2015, gaining 219%, 298% and 134% in each of those years, respectively.
Graphic - Top S&P 500 performers by year: https://fingfx.thomsonreuters.com/gfx/mkt/13/42/42/Top%20Winners%20by%20Year.jpg
The only other S&P 500 component leading the index more than once on an annual basis over the decade was chipmaker Advanced Micro Devices, which surged 80% last year and is on track to gain 132% in 2019. Up over 340% since the end of 2009, AMD's recent surge marks a comeback after a downturn in personal computer sales in the first half of the decade had many investors questioning whether the chipmaker would survive at all in the shadow of semiconductor giant Intel.
Under Chief Executive Lisa Su, who took over in 2014, AMD stopped losing money and is expected by analysts to expand its bottom line by over 40% in 2019, according to Refinitiv.
Following its stellar stock market performance, Netflix is now struggling with slowing subscriber growth, ballooning costs to produce content and new competition from Walt Disney and other services. With Netflix up 24% in 2019 and falling short of the S&P 500's 28% gain, analysts on average now recommend buying its shares. The stock remains down 20% from its record high close in July 2018.
The S&P 500's second-strongest performer of the decade has been electronic bond trading system operator MarketAxess Holdings Inc, up over 2,600%, followed by medical equipment maker Abiomed, which has surged over 1,800%.
In ninth place is Ulta Beauty, which has flourished even as other shopping mall retailers struggled to fend off Amazon and is up 1,280% over the decade. Amazon clocks in as the decade's 11th-strongest S&P 500 performer, gaining 1,232%.
Investors buying the stocks most highly rated on average by analysts at the start of the decade, and holding them through 2019, mostly would have done well. But investors buying and holding the stocks least liked by analysts at the end of 2009 also would have fared well.
Graphic - Analysts' top picks at the start of the decade: https://fingfx.thomsonreuters.com/gfx/mkt/13/39/39/Analyst%20Top%20Picks%20a%20Decade%20Ago.jpg
Among current S&P 500 components, Incyte, CMS Energy, J M Smucker, United Airlines and Delta Air Lines were the stocks with the highest aggregate analyst rating at the end of 2009, and of those, only J M Smucker underperformed the S&P 500's total return of over 250% during the decade, including dividends. The five stocks least liked by analysts at the start of the decade were Ameren, Brown-Forman, Apartment Investment and Management Co, Hershey and American International Group, and of those, only AIG has underperformed the S&P 500.
As the decade nears its finish, just one stock in the S&P 500 has an average analyst rating of "sell": Franklin Resources, the holding company that owns Franklin Templeton Investments. Eight analysts recommend selling Franklin Resources, while six are neutral and none recommend buying, according to Refinitiv data.
(Reporting by Noel Randewich; editing by Alden Bentley, Megan Davies and Dan Grebler)