The stock market had a rough 2022. Here's how Nashville companies performed

The stock market's faltering performance in 2022 erased billions in value from what had been some of the economy's top performers, but there was still some businesses that shined during an uneven year on Wall Street.

That's according to an analysis of stock price and market capitalization data by The Business Journals. Among the 100 largest companies analyzed, the average decline in market cap was 11% or $67 billion.

Overall, the S&P 500 finished the year down nearly 20%, while the Dow Jones Industrial Average ended down by about 10%.

HCA Healthcare Inc. (NYSE: HCA), the Nashville area’s largest public company, saw a decline in market cap of about $12.1 billion over the year span — starting 2022 with a market cap of $79.9 billion and ending it at $67.8 billion.

The hospital operator’s stock price fell 7%, starting the year at $256.92 per share and ending it at $239.96.

Nashville’s second largest public company based on market cap as of Dec. 31, Dollar General (NYSE:DG), logged a $411.95 million increase in market cap during the course of 2022. It started the year with a market cap of $54.6 billion and ended it at about $55.1 billion.

The retailer’s stock price rose 4% over the year, from $235.83 per share to $246.25.

When looking at the Nashville area’s 10 largest companies based on market cap, only two other companies gained ground. Acadia Healthcare Co. Inc. (Nasdaq: ACHC) saw a $2 billion gain over the course of 2022, from $5.5 billion to $7.5 billion. The health care company’s stock rose 36% to $82.32 at the end of 2022. Shoals Technologies Group Inc. (Nasdaq: SHLS) saw a gain of $122.9 million, from about $4 million to close to $4.2 million at the end of the year. Its stock jumped 2%.

The national picture

While the technology sector was the poster child for struggles in 2023, with high-profile declines for Apple Inc. (Nasdaq: AAPL), Microsoft Corp. (Nasdaq: MSFT), Amazon.com Inc. (Nasdaq: AMZN) and Google parent Alphabet Inc. (Nasdaq: GOOGL), the story was different for the energy and health care sectors.

The Woodlands, Texas-based Target Hospitality Corp. (NASDAQ: TH), which offers housing for workers in the oil and gas industries, government and others, saw its market cap grow 325% over 2022, from $362 million to nearly $1.5 billion as its share price rose from $3.56 to $15.14. It reported a record-setting third quarter in November as it retired debt and generated hundreds of millions of dollars in cash.

The Conshohocken, Pennsylvania-based Madrigal Pharmaceuticals Inc. (NASDAQ: MDGL), which is developing tests and treatments for nonalcoholic fatty liver disease, saw its stock price and market cap grow on positive results in its testing, climbing 243% in 2022 with a share price that grew from $84.74 per share to $290.25 per share.

The list of top performers on the national scene was dominated by energy and pharmaceutical businesses, with Exxon Mobile Corp, Chevron, Merck & Co., Eli Lilly & Co. and ConocoPhillips rounding out the top five based on raw growth in market cap.

Other notable names with big gains in 2022 included defense contacting giant Lockheed Martin Corp. (NYSE: LMT), telecom giant T-Mobile US Inc. (NASDAQ: TMUS) and Coca-Cola Co (NYSE: KO), among others.

Along with companies with ties to energy and health care, Randall Watsek, financial adviser at Raymond James Financial Inc., said "defensive" companies with proven track records of profit and reasonable valuations, such as consumer staple companies, also performed well.

“There was really a move from the riskier types of companies and thematic stocks that were losing money but had a good future five years from now — those companies did really poorly,” Watsek said. 

Watsek pointed to Russia's invasion of Ukraine and high commodity prices driven by restrictive energy regulations in the United Sates for why energy stocks had a good year, and the Federal Reserve as the primary driver of the pullback into stocks with more reasonable valuations. The Federal Reserve spent much of 2022 dramatically raising interest rates in a series of high-profile rate hikes in a bid to bring down inflation and loosen the tight labor market.

“The interest rate rises had the most direct impact on the most expensive growth type of stock,” Watsek said. 

The Covid-19 pandemic is also continuing to impact the stock market, according to Forrest McCall, owner of finance publication “Don’t Work Another Day.” The pandemic drove an increase in demand for oil and gas in 2021 and 2022 alongside the spike in gasoline prices during the early months of the Russia-Ukraine war. 

“Outside of increased tension in the war in Ukraine, it's very likely that these companies will see mild market cap growth in 2023 and perhaps a decrease,” McCall said. “Pharmaceuticals were another industry that saw tremendous growth in 2022. Some companies are still benefitting from the coronavirus pandemic, while others are reaping the rewards of some massive medical breakthroughs in Alzheimer's medication, among others. I would anticipate continued growth for these companies as the coronavirus continues to evolve and new medications become available.”

So what does this all mean for 2023?

“I think that inflation is going to continue going down,” Watsek said, adding that there is usually a lag of six to 12 months from higher rates driving down inflation. That means the country is only seeing that recently. “The market is anticipating that. That's why you see long-term interest rates starting to drop even though short-term interest rates are high. The Federal Reserve is still talking a tough game because they still want to keep the pressure on inflation to go down.”

While the final week of 2022 was supposed to reverse some of the 2022 losses, a volatile market meant the year ended without a strong, sustained rally, according to Jay Woods, chief market strategist at DiveWealth. 

He said a down year is usually followed by an up year.  

“The big question is if and when in 2023 will it finally break this year-long downtrend?” Woods said. “We have only had three instances since 1950 of consecutive down years. The last time it occurred was in 2002, and that ended what was the only three-year losing streak the index had suffered over that time.”