What bear market? Not for these stocks in 2008

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The best stock market strategy in 2008 was just to stay away from it -- at least since August, when the bottom began to fall out of the financial system and the economy.

Even before then, this was no market for buy-and-hold investors. The average New York Stock Exchange issue now has fallen for five straight quarters.

And yet, even in severe bear markets like this one, there are winners.

Of 7,300 U.S. equities, 480 -- or 6.6% -- as of Monday were on track to post gains for the year, according to a tally by Standard & Poor’s. Most were small or mid-sized shares; just 15 were members of the big-stock S&P 500 index.

Many of the year’s advancers fell with the market plunge in the last few months. But either they didn’t lose enough to wipe out prior gains, or they’ve since rebounded enough to get back into the black for the year.

What defined the year’s relative handful of rising stocks? There were a few common threads:

1. The new national frugality. The recession, credit crisis and the housing and stock market crashes have made many Americans poorer. But basic needs still have to be met.

Compelled (or forced) to pinch pennies, consumers are turning to familiar icons of thrift: Wal-Mart Stores, for example, which posted higher sales in November even as most retailers saw steep declines. Wal-Mart shares, at $55.05 on Tuesday, were up almost 15% year-to-date, compared with a 39% drop in the S&P 500.

In the same vein, investors have flocked to shares of dollar stores including Southland-based 99 Cents Only Stores (up 31% this year), Dollar Tree (up 57%) and Family Dollar Stores(up 33%).

McDonald’s Corp. also has proved to be an investor refuge, with its stock up nearly 5% in 2008.

A few other apparent frugality plays: pet-medications-by-mail firm PetMed Express (up 49% this year), furniture renter Aaron Rents (up 36%) and off-price retailer Ross Stores (up 15%).

2. Alternative sources of credit. Can’t get a bank loan? Head over to your local pawn shop and put your Rolex up as collateral for some fast cash. As my colleague David Pierson recently wrote, the pawn business booms in hard times.

That has drawn investors to some of the publicly traded pawn-shop chains, including two Texas-based companies: EZCorp (up 31% this year) and First Cash Financial Services (up nearly 23%).

But note: High-interest payday loans, another aspect of the business, are coming under increasing heat in many states. That has slammed shares of some companies that focus exclusively on those loans, including Advance America Cash Advance Centers, which has plummeted 82% this year.

3. Fixing the physical infrastructure. Shares of many heavy-construction-related companies have rallied sharply over the last month, on hopes for a piece of the action from President-elect Barack Obama’s expected fiscal-stimulus spending plan. But most of the stocks still are in the red for the year.

Two that aren’t: Watsonville, Calif.-based Granite Construction, a big player in infrastructure projects such as roads, bridges and dams; and Missouri-based Insituform Technologies, which repairs sewers, tunnels and pipelines. Granite is up 18% this year; Insituform has jumped 33%.

4. Fixing the human infrastructure. In a bad economy, many people will have to find new lines of work. That should be bullish for the for-profit higher education industry.

Sure enough, shares of DeVry Inc., Apollo Group (parent of the University of Phoenix) and ITT Educational Services are up about 10% this year as investors bet on rising enrollment.

5. Revisiting biotech veterans. The healthcare business will forever offer growth opportunities, particularly given the planet’s aging population. Hunting around for growth ideas in an otherwise crumbling economy, investors showed renewed faith in some biotech firms that already are well-established -- and profitable.

The year’s gainers include Thousand Oaks-based Amgen Inc. (up 24%); Genentech (up 23%). Gilead Sciences (up 12%); and ViroPharma Inc. (up 69%).

But can the winners of 2008 keep it up in 2009? The themes that worked this year may still have appeal, but in a market this dicey there’s no substitute for hard-core, stock-by-stock research -- i.e., knowing what you own, and why.

It doesn’t hurt to be a little lucky, either.

-- Tom Petruno

Photos (top to bottom): Inside a Wal-Mart store in Ohio (credit: Amy Sancetta / Associated Press); a pawn shop in Beverly Hills (credit: Ricardo DeAratanha / Los Angeles Times); repairing I-580 near Oakland in 2007 (credit: Noah Berger / Associated Press); Genentech’s headquarters in South San Francisco (credit: Ben Margot / Associated Press)