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These Bull-Market Laggards Are Worth a Look

Don't let three-year underperformance deter you from these standouts.

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Since bottoming out three years ago to date on Friday, the stock market has staged quite a comeback. The S&P 500 is up more than 100% since March 9, 2009, making many stocks' and stock funds' three-year annualized returns appear downright rosy. Of course, in stocks the rule "what goes up must come down" sometimes gets turned on its head. Companies and sectors that are beaten-down the most in a market collapse, such as during 2008 and early 2009, eventually have more room to run once the economy and market turn positive again.

Take, for example, real estate and financials stocks, both of which took a pounding amid the bursting of the housing bubble and the credit crisis that followed. Yet, today real estate and financials stocks have three-year annualized returns of 50% and 36%, respectively, versus the S&P 500 average of 28%. (For a discussion of which stock fund categories have performed best and worst in the three years since the market bottom, click here.)

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Adam Zoll does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.